From restaurants in New York to childcare providers in Arkansas to the garment industry in Southern California, Department of Labor investigators continue to uncover FLSA violations by conducting unannounced workplace inspections.
Accordingly, in January, we released our Wage and Hour Division Investigation Checklist for employers and have received terrific feedback with additional questions. Following up on your questions, we will be regularly posting FAQs as a regular feature of our Wage & Hour Defense Blog.
We previously blogged about how to prepare for an audit, and how to develop a general protocol for the investigation. In this post, we will discuss which records should be made available to Wage Hour Investigators.
QUESTION: Do we have to allow the DOL to inspect our private business records? What records do we have to make available, and what documents should we withhold?
ANSWER: Your company cannot rely on general claims of privacy or property rights as a basis for keeping the DOL from inspecting its wage and hour records . In fact, Section 11(a) of the FLSA specifically authorizes representatives of the Department of Labor to investigate and gather data concerning wages, hours, and other employment practices:
- The inspector may review documents showing the employer’s annual dollar volume of business transactions, involvement in interstate commerce, and/or work on government contracts. Those documents are inspected to determine if the employer is a covered enterprise under the FLSA, or if the employees are protected by the FLSA because their work involves them in interstate commerce.
If you are certain that the FLSA applies to your company or its employees, you may wish to discuss with the inspector whether you can stipulate to coverage and therefore eliminate or streamline this part of the inspection.
- Pursuant to Section 11(a), DOL investigators may review the wage hour records required by 29 C.F.R. Part 516. Accordingly, an inspector may require your company to produce records for each of the company’s employees showing the employee’s (i) total daily or weekly straight-time earnings, and total premium pay for overtime hours; (ii) regular rate or pay for any workweek in which overtime compensation is paid; (iii) hours worked each workday and each workweek; and (iv) date of payment and the pay period covered by that payment. An employer’s records must also show the amount and nature of each payment which is excluded from the “regular rate”, and any additions to or deductions from wages for each pay period.
Even if an inspection is the result of a specific complaint, the DOL generally will not limit its investigation to that complaint. Rather, the DOL will likely review all personnel time records and payroll records to determine whether your company is in compliance with all aspects of the FLSA for all current and former employees on the employer's payroll for the past two to three years.
- The DOL’s Wage and Hour Division is responsible for ensuring compliance with the employment eligibility verification recordkeeping requirements. Thus, the DOL inspector may demand access to your company’s I-9 forms.
Refusing to produce documents requested by DOL investigators will generally do little more than antagonize the DOL. However, employers should endeavor to avoid producing:
- Documents that were not specifically requested: For example, if the inspector only requests records of wages and hours worked, don’t produce your job descriptions. Similarly, if the investigator asks for employees’ I-9 forms, don’t turn over their entire personnel files.
There is often one exception to this rule. Hopefully, your company has implemented a policy (i) prohibiting improper deductions and (ii) including a complaint mechanism through which employees may seek reimbursement for any improper deductions. If followed, such a policy creates “safe harbor” that can protect the exempt status of employees who are subject to improper deductions. That policy, therefore, should be provided to the DOL investigator.
- Any analysis of the company’s wage hour issues prepared or requested by the company itself: A self- audit of your company’s wage and hour practices is useful in identifying and correcting violations of the FLSA. However, the DOL is likely to accept your conclusions about any violations identified in the audit, while giving no deference to any conclusions in your favor. Therefore, you should not provide DOL investigators with a copy of your self-audit or similar materials.
- Trade secret or confidential business information: Question the request to inspect trade secret or confidential business information, and discuss whether confidential information may be redacted from the requested records. If you do produce such records, label them “Confidential and Proprietary.”
After locating the records to be produced to the DOL inspector, you should retain the original copies of every record produced to the DOL and track all documents produced on a Document Control Log.