Posted on April 12, 2013

How Does a Wage and Hour Investigation Work?

The Department of Labor’s Wage and Hour Division (WHD) has been ramping up enforcement activity in an effort to ensure compliance with labor standards and protect the U.S. workforce. Because of this, industries with “vulnerable workers”—such as young, disabled or agricultural workers—may be receiving a visit from a WHD investigator. Targeted industries often include the franchising, temporary employment, independent contracting and subcontracting industries.

According to Carl Smith, WHD Deputy Regional Administrator, a typical wage and hour investigation has four stages:

# The investigator meets with you, the employer, to discuss the purpose of the investigation and to answer any questions you may have.
# The investigator takes a tour of the facility, looking for evidence of vulnerable workers and other red flags.
# Payroll and time records are reviewed to see whether you are keeping accurate records of hours worked for all employees. WHD investigators are trained to spot practices like improperly classifying employees as independent contractors and paying nonexempt employees salaries instead of hourly wages.
# The investigator chooses employees to interview, using them to cross-reference any records findings.

After he or she has collected all this information, the WHD investigator determines your compliance status and decides whether to take further action, such as subpoenas for records, search warrants or surveillance of the property and employees. If you have indeed violated any labor regulations, you may be required to pay back wages, liquidated damages and/or civil penalties. You could also be subject to training, monitoring or reporting requirements, or forbidden from participating in federal contracts in the future.

When the WHD investigator is knocking at your door, accurate payroll and time records—and quick, easy access to those records—can make the process a lot smoother. Having a system in place can help ensure your compliance with wage and hour regulations, so you will have nothing to fear from a WHD investigation. It also helps to have a trusted partner like Paycor to answer your questions along the way.

Learn more about how we can help you stay compliant and avoid costly fines from agencies like the Department of Labor: talk to a Paycor representative.

Source: American Payroll Association