The DOL has the authority to conduct investigations into employers’ compliance with wage and hour laws. The DOL can inspect workplaces, review payroll and other employment records, and interview employees and former employees to determine whether an employer is following the FLSA. Most often, the DOL investigates whether an employer is properly calculating and paying wages and overtime, if workers are properly classified, and whether an employer is keeping proper records of time worked by employees. The FLSA also gives the DOL power to impose criminal sanctions against any person who willfully violates the minimum wage and overtime provisions of the FLSA. Willful violations are found where an employer (or other person) either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA.
A recent case out of New Hampshire is a guide to what an employer should not do in the context of a DOL investigation. During the investigation, the owner of the employer solicited employees to make false statements to investigators. Later, after the DOL sued the employer for willful violations of the FLSA, the owner caused employees to alter time cards to change the hours worked, and then provided the fake time cards to the DOL. In connection with the DOL’s prosecution of the employer for willful violations of the FLSA, it sought criminal sanctions against the owner and the company’s book-keeper. Ultimately, the owner was sentenced to six months in prison, 2 years of supervised release and a $25,000 fine for obstruction of justice. The company’s treasurer and office manager plead guilty to criminally violating the FLSA and was fined $10,000.
When the DOL shows up, there are steps an employer can take to reduce risk and avoid liability (including calling counsel right away). And, even when an investigation reveals compliance problems, cooperation and honesty can help when negotiating a resolution with the DOL. Encouraging employees to lie to DOL investigators and providing fake records and other false information to the DOL will only make things worse for the employer (and any individuals who are found to have willfully violated the FLSA).
DOL guidance on visits to employers is here: https://www.dol.gov/whd/regs/compliance/whdfs44.htm