How to Survive a DOL Investigation

Imagine this: You arrive at the office one morning, check your mailbox, and find a letter from a DOL investigator demanding an early appointment to audit your company’s labor practices. Your heart begins to race. A routine audit has the potential to become an expensive nightmare, even putting your company at risk of total shutdown.

It’s a daunting and stressful situation, but don’t panic. When the DOL comes knocking, you don’t want to be the one with your head in your hands. This article will address the basic procedures to expect from your first audit, as well as how to handle any potential issues that might arise in the process. Let’s dive into it.

So, how are investigations started?

It depends. The Department of Labor initiates some investigations based on complaints submitted by current or former employees, and in rare cases, sometimes even a competitor. However, others begin as “directed” investigations, in which the Division targets “random” companies based on the DOL’s enforcement focus and priorities during any given year.

What is the investigation process?

Investigations usually follow a set pattern. First, the investigator will send an appointment letter to schedule an “initial conference” with company representatives. During this initial conference, the investigator seeks to obtain information about the company, explain the investigation process, discuss what documents will be reviewed, and schedule a mutually agreed time for the investigator to conduct in-person employee interviews. Once this process is complete, the investigator will schedule a “final conference” with company representative(s) to discuss any findings and next steps.

What can I do to prepare?

The best thing you can do is have a robust recordkeeping system. Every single law enforced by DOL places the burden of recordkeeping on the employer. This is also your best defense against any allegations of noncompliance, as you will be able to effectively show “proof” of your (hopefully compliant) work practices.

Failure to keep adequate records, although a violation in itself, opens the door for any employee allegation to be given at least partial credibility, i.e., “you’re already not keeping records like you are required to do, why wouldn’t you be violating the law in any other way?”

Another good practice is to have a decision maker from all relevant departments of the company available to answer or clarify any inquiries from the investigator during the records check and employee interviews phase of the investigation. These would include representatives from Human Resources, Payroll, Operations, and even Accounting. Their knowledge of established processes and procedures will help answer any questions from the investigator quickly and without the need for the investigator having to do any unnecessary probing and stumbling into other potential violations. This is especially important: once the investigator shows up at your doorstep, he or she has authority to inspect compliance with all the laws enforced by the Department, regardless of the law they initially showed up to enforce.

They presented me with their findings, now what?

Once the investigator completes the investigative phase, they will present their findings to a decision-maker from the company. If it all went well, they will request you maintain future compliance and be on their merry way.

However, if your company IS presented with monetary findings, you should never take them at face value. Always request a breakdown of the violations being charged- what were they based on? Were they based on your records alone, or were they based on employee interviews? If they were based on interviews, be ready to question how many employees were interviewed, and if this information is being extrapolated as representative of an entire department or company practice.

Furthermore, do you have any information that may contradict the alleged violations? If so, present it to the investigator. You should also request to see a copy of the back wage calculations and the methodology used in doing so- were you given the opportunity to calculate the back wages yourself? Standard practice is for the employer to do the calculations; however, newer investigators may choose to perform their own.

If you feel you’ve hit a roadblock with the investigator and you are convinced that the investigator is incorrect in his assessment, request a conference with their supervisor. There are two additional review levels at the District Office: the Assistant District Director, and the District Director himself. Finally, if you feel like you are outmatched, or simply don’t have sufficient knowledge of the law to make a good argument on your defense, consult with a specialist, an attorney or even both (The first alternative is far more cost-effective, and you can always hire an attorney if you are not satisfied with the specialist’s performance).

If you know the violations being charged are accurate and don’t have any evidence to dispute them, one thing you should never do is “refuse to comply”, no matter how strongly you dislike the law’s requirements. In DOL’s word’s “compliance is not an option”. There may be limited circumstances, where back wages can be somewhat negotiated, or an agreement reached with regards to payment terms, but DOL never compromises on future compliance. Refusing to comply is the fast track to the courtroom.

Final thoughts

Now that we have given you an overview of what to expect during an investigation, as well as things you can do to prepare, it would be a good idea to audit your processes and procedures with regards to recordkeeping and pay practices, so you’re not caught off guard next time you hear the words “I’m from the Government and I am here to help”.