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Behind-the-scenes: DOL investigator pulls back curtain

by on
in Office Management,Payroll Management

Whatever you do, don’t call a U.S. Department of Labor (DOL) investigator an auditor. Auditors look for nickels and dimes. DOL investigators look for compliance with the Fair Labor Standards Act (FLSA).

So said the DOL’s William Richardson to attendees at the American Payroll Association’s Annual Congress this spring.

Richardson, a DOL community outreach and planning specialist, offered crucial advice for handling a DOL investigation.

Barbara Youngman, manager of finance-payroll for Southwest Airlines, gave attendees some best practices to follow to ease investigation anxiety.

Three days to worry

Employers get 72 hours’ notice of an FLSA investigation. Richardson advised doing two things right away:

  1. Make sure that the owner, company president or other person in charge is available to talk with the investigators on that first day.
  2. Get your documents in order.

Richardson noted that investigators will ask to see your original paycheck records and payroll records, including records of adjustments. He warned that spreadsheets aren’t acceptable.

Also not acceptable: re-created records. Many times, he pointed out, people re-create records using the same pen, with the same handwriting. Those are fraudulent records, he stressed. If you don’t have original documents, say so.

The walk-around

Investigators will walk around your premises counting heads to see if the number of employees matches your payroll records. They will also interview workers. For nonexempts, Richardson said, you can’t listen in, because employees might be intimidated.

It’s not unusual for investigators to talk to employees after work.

Employers can be present when current exempt employees are being interviewed.

Investigators will also ask for a list of exempts who have terminated within two years (the statute of limitations for non-willful FLSA violations). Former employees are a font of information, ­

Richardson said, because they have nothing to lose. Investigators will query them about their duties, since they are interested in determining whether they were really exempt.

The final conference

Investigators will disclose their findings to you at a final conference, Richardson said. But they can’t talk about how much back pay you owe (if any), until you agree to come into compliance.

Then you will get a notice summarizing the investigator’s narrative report. It also goes into your case file.

If you owe back pay, you usually have 90 days to pay up, but if the amount of back pay is high, you can pay employees in installments. To get that break, you’ll have to show the DOL that you have serious money problems, Richardson cautioned.

Best practices for keeping cool

Turning to best practices for easing the anxiety of a DOL investigation, Southwest's Youngman offered straightforward advice: Be calm, courteous and respectful toward the DOL investigators. Designate one person to handle the investigation and serve as the company’s designated contact with the investigator.

The most effective step you can take is to educate company management on the process and what to expect.

She offered these additional tips:

  • Act immediately once you receive notification of the investigation.
  • Follow up in writing on any conversations you have with investigators.
  • Create a plan and involve all relevant de­­partments, including IT, Legal, HR and Payroll.
  • Always review information before handing it over to the investigator.
  • Assign a work space for the investigator and provide a private space for employee interviews.

WHY US? You may be tempted to ponder this question, but it isn’t productive. According to Richardson, investigations can arise because of a complaint. In what’s called a directed case, your entire industry may be under review. Or you could just be a random target.

Whatever the reason, Richardson said, the bottom line is not to worry about mistakes. Investigators are looking for situations in which employers misunderstood the law. He said the goal is compliance, not back pay.

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