Enforcement Actions by the DOL Wage and Hour Division
An investigation or even a more limited form of enforcement may cause the employer a considerable investment in time and aggravation, and the result is usually an assertion that back wages are owed and/or that minors have been illegally employed. In most cases, the alleged liability or child labor determinations are completely unexpected by the employer.
Since 1947, the usual period of investigation has been the most recent 104 workweeks. Back wages owed during the third-year back are recoverable in the event of willful violations. If unpaid wages are found to be owed, voluntary payment (under WHD supervision) is expected. Refusal to voluntarily pay the back wages may result in DOL litigation. 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 there is FLSA coverage, the investigator will then examine exemption potential, determine whether all workers are on the records, and evaluate monetary and child labor compliance status. It should be noted that coverage is very broad, and most exemptions are narrowly construed.
How an employer deals with the investigator may 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. 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 the FLSA, and violation findings are more serious in view of the debarment potential.
If you are engaged in public works construction, you probably have "prevailing rate" obligations. If the Davis-Bacon Act or a Related Act (DBRA) is involved, enforcement may be initiated by the contracting agency or by the DOL Wage and Hour Division. These investigations are typically very complex. Debarment is a possible outcome. Criminal prosecution by the U. S. Department of Justice sometimes occurs when certified payrolls have been falsified.
Whether the enforcement action is FLSA, SCA, or DBRA, full investigation or limited action, employers will benefit from the expert guidance available by consulting with me or with a comparably experienced consultant. Be Aware of Your Rights There are numerous articles and blogs about how to deal with a Wage and Hour Division investigator. Some of them are very useful, while the advice offered in others will cause you to just irritate the investigator, resulting in a more exhaustive investigation. Being prepared is the key. The more you know prior to contact by the Wage and Hour Division, the more effectively you can participate in management of the investigation. Failure to know how to deal with the investigator, and mistakes that are made early on, can be very costly to an employer. Rather than wait until an investigation has begun, it will be worth your while to obtain expert guidance long before you hear from the Wage and Hour Division.