Being audited is a huge burden without the right preparations and defense. For companies, being audited, demonstrating proof, knowledge and compliance of the requirements in their workforce is a lengthy and stressful process, particularly when you get caught off guard. Staying prepared every step of the way will take the weight of a possible audit off your shoulders.
Employers should keep in mind that the U.S. Department of Labor (DOL) can audit employers at any time, although the most common reason for a DOL audit is a complaint from an employee. The DOL has also targeted employers in low-wage industries for wage and hour violations, particularly in the areas of agriculture, day cares, restaurants, garment manufacturing, guard services, health care, hotels and motels, janitorial services, and temporary help. By understanding the audit process and following the guidance below, employers will be better prepared to handle a DOL audit.
- The DOL typically provides little advance notice of an audit. However, you can request time to gather records. Typically, the amount of time an employer will have will depend on the auditor.
- Contact the auditor to find out specific information about the audit. Key questions to ask are the focus of the investigation (e.g., overtime pay compliance, exempt vs. nonexempt classification, minimum wage compliance), the time period for records the auditor wants to view, and the names of any employees that may be interviewed.
- Gather the records in accordance with guidance provided by the auditor. Be prepared to provide documentation related to the company compensation policies and procedures. Keep track of exactly what information was provided. Do not provide records other than what the auditor requests.
- Designate one or two company representatives to work with the auditor. Some employers choose to designate their company’s legal counsel; other employers will designate senior managers. The representatives will have the duty to provide documents requested,arrange for any additional records to be provided to the auditor (if necessary) and coordinate employee interviews.
- During the audit, be courteous to and cooperative with the auditor. It is a good practice to provide a quiet area for the auditor to work in.
- At the end of the audit, ask the auditor to provide a summary of the results of the investigation. This information will help an employer review options for resolutions if any violations are found. If violations are found, employers are encouraged to consult legal counsel before any settlements are reached with the DOL.
To be proactive, employers should consider a self-audit, which consists of the following steps:
- Review job descriptions.
- Understand the differences between federal and state laws and ensure that the laws are correctly applied to employees.
- Ensure that FLSA classifications are correct.
- Keep accurate payroll records.
- Apply policies consistently.
- Make sure all records are complete and work to resolve any inconsistencies.
- Determine how to address any areas of concern identified via the self-audit.
Source:
SHRM (12 September 2012). “Audit: What should I expect from a Department of Labor audit?” [web blog post]. Retrieved from address https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/whatshouldiexpectfromadolaudit.aspx