Mr. Richard W. Castleton has published a new article through Senior Business Connection. The article focuses on government investigations by the U.S. Department of Labor Wage and Hour Division. It describes the general process of these investigations, what employers should expect when undergoing such an investigation, and some practical tips on how to prepare. The article is posted here on Senior Business Connection’s website and has been included below in its entirety.
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DEPARTMENT OF LABOR INVESTIGATIONS - BASICS FOR AN EMPLOYER
Over the last several years, the United States Department of Labor Wage and Hour Division (WHD) has substantially increased enforcement efforts through increased personnel, funds, and focus on certain industries. The WHD enforces several laws, including the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA), among others. Understanding the mechanics of a WHD investigation can help the employer remain calm and prepare appropriately.
WHD investigations begin as a result of either an employee or competitor complaint, or a WHD-initiated investigation. When conducting FLSA investigations, Investigators focus on employer compliance with minimum wage, overtime, child labor, and recordkeeping requirements, as well as any exemption requirements the employer may claim. Investigators gather information by (1) conducting an initial conference, (2) reviewing records, (3) interviewing employees, (4) calculating back wages, and (5) conducting a final conference.
Investigators will initiate the investigation either by setting up an appointment for an initial conference or stopping in unannounced. During the initial conference, the investigator will ask about the business’s nature, size, gross revenues, payment methods, work week, claimed exemptions, and other general information.
After the initial conference, the investigator will begin reviewing records or interviewing employees. An employer should provide a quiet, private place for the investigator to work. During records review, the investigator may review, record, or copy relevant records, including payroll records, employee records, employment contracts, and others.
The investigator will also interview employees to ask about the employer’s pay practices and policies. The WHD will insist that most interviews be conducted without the employer or its attorney present. However, this privacy does not extend to members of management. No employer should permit an upper-level manager to be interviewed without the employer or employer’s representative present.
The investigator’s next step is calculating back wages. Employers should always verify that the investigator considers vacation time, holidays, and other non-working days that could mitigate the amount of back wages. Furthermore, employers should also be aware of applicable Circuit Court rulings on back wage calculations for certain violations. Circuit Courts’ rulings prevail if there is a different in WHD enforcement policy and the courts, and such differences could have a significant effect on the amount of back wages due.
At the end of the investigation, an investigator will meet with management and discuss violations. The investigator will invite the employer to come into compliance and disclose the amount of back wages owed. If, however, the employer refuses to come into compliance, or disagrees with the investigator’s findings on exemptions, back wages, or other issues, the case may be referred to the investigator’s manager.
The WHD is currently engaged in an unprecedented number of investigations. Mistakes are often made. Employers should be cooperative and amicable, but remain vigilant to spot errors and ensure that the investigator is taking into consideration all possible exceptions and exemptions. Employers should seek clarification when needed and should feel comfortable to hire an attorney if needed.