Suppose an employee has complained to the U.S. Department of Labor (DOL) about possible wage-and-hour or overtime violations in your workplace. Once you’ve been notified that an auditor is coming, get prepared by conducting your own audit.
Labor’s auditors have plenty of latitude to inspect records and interview employees, so make sure you’ve done everything possible to discover and correct any compliance problems as well as gather documents to defend your decisions.
If faced with an audit, you should:
- Review the differences between state and federal laws to ensure you’re complying with the stricter of the two.
- Reread the job descriptions of any positions that might be in question. Interview people in those jobs and their supervisors to ensure their job descriptions are accurate. Find out what the workers actually do, and check timekeeping records. Promptly correct any errors.
- Interview exempt employees to find out how much time they spend on duties typically done by hourly employees. If it’s more than 20 percent (or in retail, 40 percent), consider reclassifying the employee as nonexempt. (There’s no liability in classifying too many people as nonexempt; it’s the opposite that plunges companies into hot water.)
- Check to see that employees are performing the job as assigned and working the hours designated by management. If they’re not, insist they start doing so.
- Train supervisors and managers on how to determine who’s exempt and who’s not.
- Check your overtime records. If you discover unpaid overtime, pay it immediately—even if the overtime wasn’t approved.
- Review your policy manual with an experienced employment attorney to make sure it’s complete and in line with the law.
- Enlist help with all this from a consultant or attorney. Many of the regulations are difficult to interpret, and the wrong call could cost you plenty.