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The DOL’s Wage and Hour Division (WHD) and Audits

The U.S. Department of Labor (DOL) administers and enforces more than 180 federal laws applicable to businesses, job seekers, workers, retirees, contractors, and grantees. These laws set basic labor standards.  Employers who violate these basic labor standards may be subject to a DOL audit.  The DOL’s Wage and Hour Division (WHD) administers and enforces laws associated with the following:

  • The Fair Labor Standards Act (FLSA)
  • The Family and Medical Leave Act (FMLA)
  • The Migrant and Seasonal Agricultural Worker Protection Act
  • The Field Sanitation Standards of the Occupational Safety and Health Act
  • The Employee Polygraph Protection Act
  • Certain employment standards and worker protections under the Immigration and Nationality Act
  • Government contracts prevailing wage statutes such as the Davis-Bacon, and related Acts and the McNamara-O’Hara Service Contract Act
  • Garnishment provisions of the Consumer Credit Protection Act

The WHD conducts investigations for a number of reasons, all having to do with the enforcement of laws and assuring an employer’s compliance. The WHD typically does not disclose the reason for an investigation. Many are initiated by complaints and some are selected based upon certain types of businesses or industries.  For example, the WHD may target low-wage industries because of high rates of violations or egregious violations, the employment of vulnerable workers, or rapid changes in an industry such as growth or decline.  Sometimes, a number of businesses in a specific geographic region will be examined.  The objective of targeted investigations is to improve compliance with the laws in those businesses, industries, or localities. All investigations are conducted in accordance with established policies and procedures and all complaints are treated as confidential; the name of the worker and the nature of the complaint are not disclosable; and whether a complaint exists may not be disclosed.

The WHD does not require an investigator to previously announce the scheduling of an investigation, although in many instances the investigator will advise an employer prior to opening the investigation. The investigator has sufficient latitude to initiate unannounced investigations in many cases in order to directly observe normal business operations and develop factual information quickly.  An investigator may also visit an employer to provide information about the application of, and compliance with, the labor laws administered by the WHD.

Investigations may be conducted under any one or more of the laws enforced by the WHD.  One of the most common is an investigation with regards to the Fair Labor Standards Act (FLSA), which is the primary federal law of most general application requiring the payment of the minimum wage and overtime premium pay, the keeping of basic payroll and employment records, and limiting the working hours and types of jobs for certain underage youth. Section 11(a) of the FLSA authorizes representatives of the WHD to investigate and gather data concerning wages, hours, and other employment practices, enter and inspect an employer’s premises and records, and question employees to determine whether any person has violated any provision of the FLSA.

In general, an investigation consists of the following steps and actions:

  • The WHD investigator will identify himself/herself and present official credentials. He/she will then explain the process and types of records required during the review.
  • He/she will then examine the records to determine which laws or exemptions apply. For example, these records may include: those showing employer’s annual dollar volume of business transactions; involvement in interstate commerce; and work on government contracts.  Information should never be revealed to unauthorized persons.
  • He/she will examine payroll and time records, taking notes or making transcriptions or photocopies essential to the investigation.
  • He/she will conduct interviews with certain employees in private.  The purpose of these interviews is to verify the employer’s payroll and time records, to identify workers’ particular duties in sufficient detail to decide which exemptions apply, if any, and to confirm that minors are legally employed. Interviews are normally conducted on the employer’s premises. In some instances, present and former employees may be interviewed at their homes, by mail, or by phone.
  • When all of the fact-finding steps have been completed, the investigator will ask to meet with the employer and/or representative of the firm who has authority to reach decisions and commit the employer to corrective actions, if violations have occurred.  The employer will be told whether violations have occurred and, if so, what they are and how to correct them. Employers may be represented by their accountants, attorneys, consultants, at any point during this process. When the investigator has advised the employer of his/her findings, the employer or representatives may present additional facts for consideration, if violations were disclosed.
  • If back wages are owed to employees by the employer because of minimum wage or overtime violations, the investigator will request payment of back wages and liquidated damages due to employees. The WHD also has the authority to assess civil money penalties to be paid to the government by the employer.

The WHD makes every effort to resolve most compliance issues administratively, as stated above.  However, will litigate and/or recommend criminal prosecution in the following ways:

  • The WHD may seek a U.S. District Court injunction to restrain violations of the law, including the unlawful withholding of proper minimum wage and overtime pay, failure to keep proper records, and retaliation against employees who file complaints and/or cooperate with the department.
  • The WHD may seek an order for payment of civil money penalties from a U.S. DOL Administrative Law Judge, where appropriate.
  • An employee may file a private suit to recover back wages, an equal amount in liquidated damages, plus attorney’s fees and court costs. In such case, the WHD will not seek the same back wages and liquidated damages on that employee’s behalf.
  • The FLSA provides that the WHD may seek a U.S. District Court order to prevent the shipment of the affected goods.
  • Employers who have willfully violated the law may be subject to criminal penalties, including fines and imprisonment.

Employers should keep in mind that employees who have filed complaints or provided information cannot be discriminated against or discharged on account of such activity.  If adverse action is taken against an employee for engaging in protected activity, the affected employee or the Secretary of Labor may file suit for relief, including reinstatement to his/her job, payment of lost wages, and damages.

Many of the above provisions are found in other laws administered and enforced by the WHD:

  • The Migrant and Seasonal Agricultural Worker Protection Act also provides for the assessment of back wages, civil money penalties, criminal sanctions, fines and imprisonment.
  • In the case of government contracts, contract funds may be withheld for violations under the Walsh-Healy Public Contracts Act, McNamara-O’Hara Service Contract Act, Davis-Bacon and Related Acts, and the Contract Work Hours and Safety Standards Act. Administrative hearings or court actions may be initiated to recover back pay under these laws.  In addition, liquidated damages may be assessed for certain violations. Violators of these laws may also lose their federal contracts and be declared ineligible for future contracts for a specified period.

For additional information on this topic, please contact us at www.newfocushr.com or visit the Wage and Hour Division website at www.wagehour.dol.gov.

Written by: Kristen Deutsch, M.B.A., CCP



Source of Information: The Department of Labor Wage and Hour Division website at www.wagehour.dol.gov




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