A U.S. Department of Labor Wage and Hour Division (WHD) investigation often begins with a letter requesting payroll records, employee information, and other employment data. WHD investigations may arise from employee complaints, agency-directed initiatives, or inter-agency referrals and can impact employers across all industries.
The WHD conducts these investigations under the Fair Labor Standards Act (FLSA) and the Service Contract Act (SCA), which authorize the agency to enter and inspect workplaces, examine records, and interview employees to determine compliance with federal wage and hour laws. Employers should act promptly upon receipt, as initial responses can significantly shape the scope and direction of the investigation.
The WHD’s requests for documents and information can include payroll records, timekeeping data, employee classifications, and employee contact information. The agency may also interview employees and management. Records produced and information gathered during this phase often drive findings, so employers should ensure responses are accurate, complete, and carefully reviewed by counsel familiar with WHD investigations before submission.
Following its review of the submission, WHD typically holds a closing conference to present findings, including any alleged violations and back wage calculations. Findings often turn on fact-specific issues such as employee classification, timekeeping practices, and calculation of the regular rate of pay.
If the parties do not reach a resolution at the closing conference, WHD may pursue administrative enforcement. Early resolution can address alleged issues before escalation, but if the matter proceeds further, it may result in increased exposure, including additional damages and public filings.
Compliance and Preparedness Measures for Employers:
- Maintain accurate, complete, and consistent payroll and timekeeping records.
- Review employee classifications (exempt vs. non-exempt and independent contractor status) for compliance.
- Ensure compensation practices, including overtime and bonus calculations, comply with FLSA requirements.
- Prepare management for interviews and ensure consistent, accurate communication.
- Evaluate document requests carefully and respond in a timely, organized manner.
Impact
WHD investigations present significant legal and operational risk. Proactive compliance, coupled with early legal guidance, can help manage the process efficiently and reduce potential exposure.
For questions or guidance on how a WHD investigation may impact your organization, please reach out to your Gordon Rees Scully Mansukhani attorney or a member of the Employment team.