Wage and Hour Consulting Services

WAGE and HOUR DIVISION INVESTIGATIONS

The usual period of investigation is the most recent 104 workweeks. However, if DOL ultimately makes the decision to seek an injunction (requiring future compliance and payment of back wages and liquidated damages) in an FLSA case, the investigator will probably return to your establishment for the purpose of gathering evidence for a three-year period.

If an investigation results in a determination that unpaid wages are owed, the investigator will ordinarily request that the employer agree to voluntary payment (under DOL supervision). Refusal to voluntarily pay the back wages may result in DOL litigation (discussed above) or some other additional enforcement action. Under FLSA and certain other statutes, notification to employees of their independent right to sue is standard procedure when DOL neither recovers back wages nor files suit. When the back wages are owed under the Service Contract Act (SCA), Davis-Bacon Act (DB), or a law related to DB (DBRA), action is taken to withhold funds from the prime contract for payment of back wages (even if the investigated employer is a subcontractor).

If back wages are, in fact, owed, it is to the employer's advantage to voluntarily make restitution, preferably utilizing the official back wage receipt form that the investigator may make available (form WH-58). However, it is not uncommon for a back wage demand to be based on a flawed interpretation of the statute or a failure of the investigator to fully comprehend relevant facts. You should not be reluctant to ask questions and to insist on a thorough explanation of why you allegedly have not been in compliance. Do not agree to pay back wages until you are satisfied that you owe them. Ask for a reasonable period to consider the matter, then obtain the help of an advisor who understands the nuances of Wage and Hour Division laws.

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 from the very beginning has much to do with the outcome and possible complications. Additionally, it is very advantageous for an employer to be prepared. A thorough understanding of applicable exemptions and the standards that affect non-exempt employees, as well as overtime computation methodology, will help an employer to answer the investigator's questions and to expedite the investigation.

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 a time-consuming and expensive 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), so even a limited or "informal" procedure must not be taken lightly. Regardless of the type of announced enforcement action, employers will benefit from expert guidance.