At a government/industry/payroll professionals meeting in Washington, DC, a DOL representative revealed that many DOL investigations are prompted by workers even though their employers are currently in compliance. “Currently” is a key word because there still could be prior violations that result in damages. It gets worse. The DOL does not have to let you know they are investigating your firm—they can just walk in unannounced—and in many cases do—to observe your normal business operations and pick up factual data for their wage and hour audit.
Any employee confusion can lead to an audit. According to Mark Lara, a DOL District Director, “The most dangerous employee is a confused employee.” For example, many people assume that if they work after 5 p.m. and/or on weekends they get overtime pay, without realizing that it is part of their normal shift or they have not yet worked 40 hours in the workweek and they generally are not entitled to overtime. And employees whom you assume know how and what they are being paid can be confused by pay stubs.
The same goes for Independent Contractors. For example, some ICs assume that you are withholding and depositing FIT (imagine their outrage when they discover that you have not).
To help prevent a surprise visit from the DOL, periodically review Fair Labor Standards Act (FLSA) regulations. Also train every supervisor and manager in FLSA rules. This avoids their making pay promises your firm can’t keep—such as a supervisor telling employees they are being paid overtime for certain hours when they are not, or telling them they are not being paid overtime when they are.