Wage War Against Wage and Hour Investigations

Posted on Monday, August 13, 2018

Wage and hour laws are some of the most frequently violated in the manufacturing and distribution industry. They can be hard to understand and there's a large discretionary component in their enforcement.

Investigations are done by the Wage and Hour division of either the federal or state Department of Labor. If you get a letter seeking records to document violations of wage and hour policy, prepare for what can be an expensive result.

If an investigation finds your company in violation, the price can escalate quickly. The department has the right to go back as long as four years, locating employees who no longer even work for your company and demand that you make the wrongs right and also pay penalties.

Here are some considerations if your business is facing a wage and hour investigation:

Know the rules. Wage and hour laws can be deceptively simple but they trip up a lot of business owners. Consult with a human resources adviser and follow the rules. Most investigations are triggered by complaints. All it takes is one disgruntled employee or ex-employee who picks up the phone.

Tread lightly. The Department of Labor has been promoting its compliance assistance program. The agency will send representatives to workplaces or business group meetings to provide seminars and answer questions. Click here for more information. But be skeptical. You don't want to invite trouble into your building. In the end, it may be cheaper to hire a consultant who can offer a more balanced business approach.

Play it straight. The most common violation involves putting people on the exempt payroll, which makes them ineligible for overtime, when they don't qualify as exempt. Look over your records and straighten out any misclassified employees if they exist.

The second most common violation is failure to pay for preparation, cleanup or travel time. The onus is on the employer to prove that the employee wasn't working more than 40 hours. It's your word against the employees.

Be responsive. The easier that you make it for the Department of Labor to inspect your records, the faster the investigation will be over. Sending a response that says, "We didn't do it," without supporting evidence just brings on trouble and prolongs the process. Prepare documents and send them with a well thought out response.

Remember, inspectors are often overworked. In many areas, the Department of Labor will settle for a thorough self-analysis. If you rectify the problem and spell out the solution for the investigators, they may be satisfied and go away.

Get those I-9s in shape. Government agencies are under a lot of pressure to enforce immigration laws - especially now. Make sure you have the appropriate paperwork for each employee because if the government finds anything, it may add an I-9 inspection to the list.

Don't roll over if you're not guilty. The rules are not absolute, even though wage and hour officials like to make them sound that way. If you can explain the underlying rationale, the department may defer. This requires hiring a lawyer who knows the ropes, but it can save you big bucks in the long run.

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Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.