On March 24, 2009, the Department of Labor (“DOL”) issued a statement making clear that employers, including Hawaii employers, can expect an increase in DOL audits.  The statement, issued through Secretary of Labor, Hilda Solis, can be found at the DOL’s website, http://www.dol.gov/opa/media/press/esa/esa20090324.htm.

Among other things, Ms. Solis stated that she is “committed to ensuring that every worker is paid at least the minimum wage, that those who work overtime are properly compensated, that child labor laws are strictly enforced and that every worker is provided a safe and healthful environment.”

In addition:

The department’s Wage and Hour Division has already begun the process of adding 150 new investigators to its field offices to refocus the agency on these enforcement responsibilities. In addition, under the American Recovery and Reinvestment Act, the agency will hire 100 investigators to ensure that contractors on stimulus projects are in compliance with the applicable laws. The addition of these 250 new field investigators, a staff increase of more than a third, will reinvigorate the work of this important agency, which has suffered a loss of experienced personnel over the last several years.

Finally, Ms. Solis stated that:  “I am dedicated to ensuring compliance with federal labor laws to both strengthen our economy and protect workers in this country.”

Given the expressed intent of DOL, it is critical that Hawaii employers take the necessary steps, now, to both reduce the risk of potential liability connected to a possible audit AND to prepare for audit itself. 

Thus, Hawaii employers should at a minimum take the following steps prior to and during the audit:

After the audit is completed, it is critical that the Company not repeat any errors in policies or procedures identified by DOL.  Accordingly, any necessary revisions should be made promptly with assistance of counsel.

Roman Amaguin, Esq.; romanamaguin@yahoo.com; www.amaguinlaw.com

Roman Amaguin, Esq. is a Hawaii lawyer specializing in employment law, labor law, and civil litigation.

According to the Strategic Plan, the third goal, Safe and Secure Workplaces “focuses on ensuring that workplaces are safe, healthful, and fair; providing workers with the wages due to them; providing equal opportunity; and protecting veterans’ employee and reemployment rights.” It is this area that prompts the majority of DOL audits of employers.

The newly appointed Secretary of Labor, Hilda Solis, issued a statement on March 24, 2009 that the DOL is renewing its efforts to enforce labor laws across the country. With the addition of 250 field investigators provided to the DOL under the American Recovery and Reinvestment Act, businesses can be assured of increased audits.

In is important to understand that the DOL is quite a large organization with far reaching regulatory authority. The DOL has 27 divisions that each has their own function. A few of the divisions that are most familiar to private employees are:

In 2008 the WHD recovered more than $185 million in back wages for 228,000 employees. In addition, the agency assessed $9.9 million in civil monetary penalties and concluded 28,242 compliance actions. Including the 2008 figures, the 8 year cumulative total of back wages collected by the agency was $1.4 billion dollars. (Please click here for US Department of Labor 2008 Fiscal Year Report)

Audits are generally triggered either when a current or former employee files a complaint with the DOL or when the DOL targets a specific industry for investigation. It is a common practice of the DOL to target a variety of low-wage industries including day care, agriculture, janitorial services, the garment industry, healthcare, the hotel and motel industries, restaurants, and temporary help. These industries generally have vulnerable and often immigrant workforces, and a history of chronic violations.

Keeping in mind the many arms of the DOL and its numerous divisions, there are many areas that may be audited and some of the main areas of employee complaints (that result in an audit) are listed below:

In addition, many states have a state agency equivalent to the DOL. For example, in California there is the Division of Labor Standards Enforcement, which can also audit CA employers for the same items as the DOL. It is imperative to know your specific state’s requirements in addition to federal regulations. In California, employers should also ensure they are complying with meal and rest break requirements, properly recording meal breaks and the employees’ time worked, properly paying overtime, and reimbursing employees for all business related expenses.

Liability for violation of the wage and hour laws does not require evidence of bad intent or unlawful motive by an employer. The performance of the employee is also rarely an issue, making the employer’s exposure fairly straightforward in most cases. 

If the DOL audits your company, a representative will visit your facility to conduct interviews, make sure the required posters are hung, and possibly examine the time clocks to determine whether your company is in compliance with the Fair Labor Standards Act. DOL will then review up to 3 years’ worth of your wage-and-hour records and investigate your wage-and-hour practices to determine whether you have paid your employees the proper amount of overtime. This will include a review of your pay records, so you must make sure the records are accurate and organized.

Employers need to be proactive about complying with these complex wage and hour laws. If cost is a concern, complete an in-house audit and then have an attorney double check the policies and practices. It will cost a lot more to contact an attorney after the DOL or state agency is in your workplace or the lawsuit has already been filed.

If you want to learn more Human Resources Tips, please click here for more information.