Wage and Hour Investigations

WHAT TO DO IF: The Wage and Hour Investigator
Appears at Your Doorstep!

You are working away at your desk. The telephone rings and your receptionist says, "So and so is here. They’re from the Department of Labor. They say they’re here to make a wage and hour investigation."

After you recover from your surprise, you will probably start asking yourself a lot of questions, such as:

Where do I begin? For starters, do the following:

• Check the investigator’s credentials.
• Obtain the investigator’s name and telephone number: Retain the investigator’s business card, if possible.
• After you have verified that it is a wage and hour investigation, contact your labor attorney immediately.
• Do not sign any papers or documents that the investigator may present to you. Also, do not make any statement about the investigations without the approval of your attorney.

What is the wage and hour investigator looking for? Basically, the investigator is checking to make sure your business complies with the Fair Labor Standards Act (FLSA). The FLSA applies to all employers engaged in commerce. Following are highlights of the FLSA and its current regulations.

The FLSA also includes specific exceptions and exemptions to the minimum wage. For example, the FLSA provides for a training wage. Employers must be careful to make sure they meet all of the stringent restrictions for training wages. Here are a couple of the restrictions:

• Covered employers must comply with the FLSA’s minimum wage requirement. The current minimum wage is $5.15 an hour.
  • training wages apply only for the first six months of the trainee's employment and
  • employers must obtain DOL approval to pay the training wage. 
     
• Covered employers must comply with the FLSA’s maximum hour limitation. Generally, if an employee works more than 40 hours a week, the employer must pay one and one-half times the employee’s hourly rate for every hour after 40 hours.
  
  Again, there are exceptions and exemptions. Of these, the "white collar exemption" is perhaps the most well known.
  
• Covered employers must make, keep, and preserve records of persons employed. These records should be kept for three years. Each employee’s record must include the following information:
  • the employee’s name, home address, sex and occupation;
  • employee’s date of birth if the employee is under 19 years old;
  • the time of day and the day of the week in which the employee’s work week begins;
  • hours worked each day and total hours worked each week;
  • straight time and overtime pay rates;
  • total straight time and overtime earnings; 
  • all payroll deductions;
  • date and amount of payments, along with time periods covered for each payment.
    
• Remember that the FLSA defines employees very broadly. The test to determine whether a worker is an employee or an independent contractor is an "economic reality" test.
  
  There are two key elements in proving an employee relationship according to the FLSA. The worker must be economically dependent on the company (unlike an independent contractor who provides services for several companies). Also, the worker must perform tasks that are routine in nature (versus an independent contractor, who determines his/her own hours and methods of work).
  
• The FLSA also governs child labor. Child labor laws regulate the type and conditions of employment, along with the number of hours worked per day and per week. The critical factor here is the employee’s age.
  
• The FLSA contains a very broad anti-retaliation provision. This provision protects employees who bring wage and hour complaints to the DOL.
  
  There are two key points to this provision. First, if the employee voluntarily quits, the employer cannot disclose that the ex-employee filed a FLSA charge against the employer.
  
  Second, employers are forbidden to settle wage and hour complaints directly with employees. Settlement must be done under the supervision of the Secretary of Labor or the courts.

What is the basis for the investigation? The basis of the investigation is not restricted. An investigation may be triggered by complaints from employees, unions or competitors. Or, the wage and hour investigator may visit your place of business because the DOL is focusing on certain industries where there are many violations. Finally, the wage and hour investigator may come calling simply to review your records and to make sure your recordkeeping complies with the law.

Does the wage and hour investigator have total access to my business? The investigator may enter and investigate any places and/or records considered necessary or appropriate. Although this gives the investigator a great deal of latitude, "fishing expeditions" are not permitted. The investigator must be able to prove that his/her request is either relevant or authorized by law. If you refuse access, the DOL may obtain a subpoena to compel compliance.

Must the investigator stop after researching the complaint? The scope of the investigation may go beyond a specific complaint, but it must be tied somehow to the original complaint. Again, fishing expeditions are not allowed.

What should I do if the investigator doesn’t find any violations? Consider asking for written confirmation of the investigator’s findings. Written confirmation may be useful if an employee sues the company or if the government reinvestigates.

Requests for written confirmation should be made to the Wage and Hour Commission of the Department of Labor. A detailed description of the situation should accompany the request. The DOL often refuses these requests, but give it a try!

I want to be prepared better if another wage and hour investigator comes to my business. What should I do? Making sure that your recordkeeping practices comply with the law is one of the best precautions. The task of keeping up-to-date records is strictly the employer’s responsibility. If an employee files a wage and hour claim and the employer’s recordkeeping is inadequate, the courts will resolve the claim in favor of the employee.

The bottom line is: keep adequate records and remember the four-step checklist at the beginning of this article if the wage and hour investigator knocks at your door.

Posted 10/22/1997