Manufacturing
Feb 19, 2024
2 min read

Wage War Against Wage and Hour Investigations

Wage and hour laws can be hard to understand, and there's a large discretionary component in their enforcement. Violations of these laws are common in the manufacturing and distribution sector.
 

Investigations are performed by the Wage and Hour Division of either the U.S. Department of Labor (DOL) or a state agency. If you get a letter seeking records to document violations of wage and hour policy, prepare for what can be an expensive result.

If an investigation finds your company in violation, the price can escalate quickly. The government has the right to go back as long as four years, locating employees who no longer even work for your company and demand that you make the wrongs right and also pay penalties.

Best Practices
 

Here are four considerations if your business is facing a wage and hour investigation:

1. Know the rules. Wage and hour laws can be deceptively simple, but they trip up a lot of business owners. Consult with your employment attorney and human resources advisors and follow the rules. Most investigations are triggered by complaints. All it takes is one disgruntled employee or ex-employee who picks up the phone.

The DOL has a Compliance Assistance program, which provides some resources for employers. Click here for more information. But be skeptical. You don't want to invite trouble into your building. In the end, it may be cheaper to hire a consultant who can offer a more balanced business approach.

2. Play it straight. The most common violation involves putting people on the exempt payroll, which makes them ineligible for overtime, when they don't qualify as exempt. Look over your records and straighten out any misclassified employees if they exist.

The second most common violation is failure to pay for preparation, cleanup or travel time. The onus is on the employer to prove that an employee wasn't working more than 40 hours. It's your word against the employees.

4. Be responsive. The easier that you make it for the DOL to inspect your records, the faster the investigation will be over. Sending a response that says, "We didn't do it," without supporting evidence just brings on trouble and prolongs the process. Prepare documents and send them with a well-thought-out response.

Remember, inspectors are often overworked. In many areas, the DOL will settle for a thorough self-analysis. If you rectify the problem and spell out the solution for the investigators, they may be satisfied and go away.

5. Get I-9s in shape. Government agencies are under a lot of pressure to enforce immigration laws. Make sure you have the appropriate paperwork for each employee because if the government finds anything, it may add an I-9 inspection to the list.

Prepare to Defend Yourself
 

Don't just roll over if you're not guilty of the claims against you. The rules aren't absolute, even though wage and hour officials may make them sound that way. If you can explain the underlying rationale, the government may defer. This requires hiring a lawyer who knows the ropes, but it may save you big bucks in the long run.