Survey: Audits Up for Wage-and-Hour Violations

One in five employers has been audited at least once for violating the federal wage-and-hour law, according to a recent survey by Business and Legal Reports Inc.


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Constant internal oversight of pay practices can lower your chances of a Department of Labor (DOL) audit or an employee lawsuit, says Susan Prince, J.D., managing editor of BLR. Internal audits are especially important now, since Congress changed the overtime-exemption rules of the Fair Labor Standards Act last year.

In fact, DOL has estimated that more than half of employers have incorrectly classified employees under the law.

The BLR survey showed that 15 percent said they've been audited once; another 5 percent said they've been audited between two and five times. Seventy-nine percent said they've never been audited.

Prince advised employers to make sure that employees are properly classified, and that their job descriptions are accurate. Workers who are incorrectly classified as exempt from overtime pay can file a complaint with the Labor Department and be entitled to back wages. In fact, the Labor Department last year collected $165 million in retroactive pay from employers who violated the Fair Labor Standards Act.

Prince advises employers to pay any past overtime due to employees right away – it will be less costly in the long run than paying them through a DOL settlement procedure.

If DOL audits your workplace, here's what to expect: a DOL representative will conduct interviews at the company, make sure the required posters are hung, and possibly examine the time clocks. Up to three years of your wage and hours records may be examined.

Last, Prince tells employers to cooperate if an employee decides to file a complaint. Retaliation is prohibited by law.

BLR, which publishes two websites geared to human resources professionals HR.BLR and Compensation.BLR, gathered their survey information from about 400 companies of various sizes across the country.

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