Surviving a Wage and Hour Audit

So you've prepared as best you can for a wage and hour audit. Or maybe you haven't prepared at all. Either way, don't panic! You'll feel a bit more comfortable if you know what to expect, and how to manage the process.

• The investigator will ask questions about what the company does, and who makes decisions. He or she will ask for a Federal Tax ID number, annual dollar volume of business, structure of the business and other information in order to verify coverage of the Federal Fair Labor Standards Act (FLSA). The investigator will then ask to see the I-9's, payroll and employee records.

• One person (preferably an employee with some authority) should be assigned to work with the investigator. That person should keep a list of all records examined, all questions asked, and all employees or other persons interviewed by the investigator. The investigator should be advised that this employee is being assigned as the designated point of contact during the course of the investigation and that in seeking company records or making inquiries about them, the investigator is to work exclusively through this employee only.

• Provide the investigator with a private office or other area that is reasonably separated from other employees, especially those employees who have access to office records.

• Escort the investigator about the premises as needed. Don't allow him or her to wander about freely.

• Allow the investigator to examine all payroll and time records for the most recent two-year period. When time records are requested, bring in no more than two or three weeks of time records at one time. All time records for terminated employees should be pulled and kept separately from current employees' time cards, and only supplied if requested.

• You are not required to permit employee interviews on company time or on the company premises. However, the investigator has a right to interview employees about work performed, hours worked and pay received. We recommend that you allow them to do this on company time and on company premises rather than making them do this at the employee's home after work. The investigator should be advised that when he or she wants to speak to any employees, each employee will be brought to the investigator individually, upon request, by the person you've designated to work with the investigator.

• At the conclusion of the investigation, the investigator will discuss any violations (if there are any) and will ask for the company's position with respect to future compliance and the payment of back wages on the basis of the violations found. You can (and should) defer a response in order to review this with your legal counsel.
  

We recommend referencing the Wage and Hour Division's Fact Sheet on employee visits for further details.

Last tip: make sure that your I-9 records are up to date and the forms are certified properly. This is checked in the routine audits that are conducted. Keep your I-9s for all employees in a separate file so that it is easy to provide these to the auditor.

Authored by Dave Waldorf