The usual period of investigation is the most recent 104 workweeks. If unpaid wages are found to be owed, voluntary payment (under DOL supervision) is expected. Refusal to voluntarily pay the back wages may result in DOL litigation or some other additional enforcement action. Under FLSA, notification to employees of their independent litigation rights is standard procedure when DOL neither recovers back wages nor files suit.
Virtually any employer is subject to investigation for FLSA compliance. The first objective of the investigator is to establish "coverage." If coverage is not applicable (this is rare), the investigation will not proceed. If there is FLSA coverage, the investigator will then examine exemption potential and evaluate compliance status.
How an employer deals with the investigator may drastically influence the outcome of an investigation, either avoiding or creating complications. It is advantageous for an employer to be prepared. It is vital that your thorough understanding of each claimed exemption enables you to clearly explain to the investigator how your scenario fits within the exemption; otherwise, you are setting the stage for an expensive and time-consuming ordeal. If your pay plans are legal but complex, failure to correctly explain the methodology to the investigator can result in erroneous violation assertions. Essentially, what you don't know can hurt you, and what you say "can and will be used against you."
Please note that "investigation" is not the only type of enforcement action; the investigator might say "This will not be an investigation, it will only be a conciliation," or "I am asking you to perform a self-audit," or some similar limitation may be expressed. These "informal" procedures may be converted, at the investigator's option, to an investigation. The results of limited enforcement actions become a part of the Wage and Hour Division database (as do investigation findings, of course), so even a limited or "informal" procedure must not be taken lightly.
If you are a federal service contractor, the investigation will include a determination of compliance with the Service Contract Act. This type of enforcement is typically much more involved and complex than an investigation that is limited to FLSA, and violation findings are potentially more serious in view of the debarment potential. See Service Contract Act.
Whether the enforcement action is FLSA or SCA, full investigation or limited action, employers will benefit from expert guidance.
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