May 02, 2005
Department of Labor Audits: What to Expect

If your company has been the subject of an audit by the Department of Labor (DOL), you're not alone. Of companies responding to our recent survey, Five-Minute Overtime Audit: See How Your Company's Reaction to the New Overtime Rules Measures Up, 15 percent said they had been audited once, and 5 percent said they had been audited between two and five times. DOL audits are often productive: In 2004, the agency collected $197 million in back wages for more than 280,000 workers.

Such 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. As usual, in 2004, the DOL targeted 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.

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DOL's Wage and Hour Division has traditionally targeted low-wage industries with vulnerable, and often immigrant, workforces, and those industries with a history of chronic violations.

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.

It is interesting to note that when comparing the number of audits to the size of the company, BLR's survey showed that the only companies that reported having been audited more than five times were companies with more than 500 employees. For more information about our survey and about self-audits, see this article.

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