Wage & Hour FAQ #1: How to Prepare for a Wage Hour Inspection

By: Kara M. Maciel

Earlier this month, we released our Wage and Hour Division Investigation Checklist for employers and have received a lot of great feedback with additional questions. Following up on that feedback, we will be regularly posting FAQs as a regular feature of our Wage & Hour Defense Blog.

In this post, we address a common issue that many employers are facing in light of increased government enforcement at the state and federal level from the Department of Labor.

QUESTION: “I am aware that my industry is being targeted by the DOL for audits and several of my competitors in the area are facing wage and hour investigations.  What should I be doing now to proactively prepare my company in the event we are next for an audit?”

ANSWER:  Even though your company may not be in the midst of an investigation, there are still several action items that you can implement to place your company is the best possible position to defend against any DOL investigation.  For example:

  • Check current 1099’s as well as all 1099’s going back several years and review the actual job duties of those persons paid as independent contractors to verify that they were not, in fact, employees.
  •  Examine all written job descriptions to ensure that they: (i) accurately reflect the work done, (ii) have been updated where necessary, and (iii) indeed justify the applicable exemptions.
  • Review time keeping systems to ensure that non-exempt employees are being paid for all work performed, including work pre- or post-shift and during meal breaks
  • Ensure that required payroll records and written policies and procedures are current, accurate, and compliant.

Training staff is another key component of protecting your company from costly wage and hour claims. Not only could all managers be familiar with the FLSA and state wage and hour laws, but all employees should understand their role in proper record keeping and overtime. Key managers and personnel should be aware of the DOL’s inspection rights and what the DOL can and cannot do while on your property.

Finally, developing a response team with legal counsel is critical to being prepared if an inspection official knocks on your door unannounced. The response team should be armed with information and protocols so they know how to address the DOL’s subpoenas, questions, document requests, and other investigative demands.

In subsequent FAQs, we will discuss in more detail who should participate in a response team and what information they need to have in the event of an unscheduled DOL audit. But, in the meantime, regular internal reviews and audits of your wage and hour practices and documentation is key to protecting against costly exposure from a government investigation.

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Be sure to check out our Wage and Hour Division Investigation Checklist for more helpful tips and advice about preparing for and managing a Wage Hour Inspection.

 

Wage Hour Division Issues New Child Labor Regulations

The Wage and Hour Division issued new updated regulations for non-agricultural industries on May 19, 2010.  These laws strengthened the restrictions on minors under age 18 working in dangerous occupations or around certain equipment or machinery in the workplace.

A practical chart from DOL showing the differences in the old and new regulations can be found here.

Child Labor Penalties Increased for Violations that Cause Death or Serious Injury

By Doug Weiner

Hazardous occupations are no place for employees under the age of 18. Employers must be certain to prohibit minors from operating power driven wood working machines, metal working machines, bakery machines, fork lifts, balers and compactors, meat slicers, and nail guns. The full list of hazardous occupations are set forth in the Code of Federal Regulations, 29 C.F.R. 570, et. seq. Protecting America’s children in the workplace has long been a stated objective of the U.S. Department of Labor, and the civil money penalties for serious violations have recently been strengthened.

On January 20 the Labor Department’s Wage and Hour Division issued guidelines to enforcement personnel for determining appropriate civil money penalties against employers who violate the child labor provisions of the Fair Labor Standards Act. As stated in Field Assistance Bulletin 2010-1, the guidelines “draw heavily on the child labor civil money penalty process the WHD [Wage Hour Division]  has developed over the past 25 years.” In addition, there is new advice resulting from the FLSA amendments that became effective May 21, 2008 with the enactment of the Genetic Information Nondiscrimination Act (GINA).

 

The DOL has created a Child Labor Enhanced Penalty Program (CLEEP) to incorporate GINA’s stiffer penalties. A “CLEEP serious injury” is defined as one caused by a child labor violation resulting in a permanent loss or substantial impairment of one of the senses, or of the function or movement of specified body parts. The bulletin identifies categories of injuries, and provides higher penalties for more serious injuries. 

 

GINA included an amendment to the FLSA, 29 U.S.C. 216(e), providing a penalty of $50,000 for a violation causing death or serious injury to an employee under the age of 18. The penalty may be doubled to $100,000 if the violation is willful or repeated. Prior to GINA’s amendment, the maximum child labor civil money penalty was $11,000.

 

For GINA’s enhanced penalties to be applicable there must be evidence to prove the violation of a specific Child Labor Hazardous Order directly caused the death or serious injury of an employee under 18. The January 20 Field Assistance Bulletin sets forth detailed examples of violations that cause injuries as opposed to injuries that occur while employed in violation of a child labor hazardous order.

 

Of course no one wants an accident to occur to anyone at any time. However, in light of the DOL’s increased enforcement authority in the area of child labor, employers are well advised to verify the ages of their employees. If an employee is under the age 18, it is mandatory to ensure the employee is not permitted to engage in any prohibited activities.