Gone are the days when the US DOL’s Wage & Hour (“WHD”) division urged employers to proactively identify and collaborate with the division to correct their wage and hour errors. The chapter in which employers might expect WHD to step aside from the threat of double damages outside of blatant cases is closed. After years of a previous administration focused on helping compliance, there is a new Guardian at DOL, and his approach so far could be described as less carrot and more stick.
We have observed the change at WHD both through formal announcements and anecdotal experiences. Only a few weeks after the arrival of the new administration, the DOL confirmed its end of the PAID program, which called on employers to conduct self-checks and work with WHD to address identified issues and provide wage arrears to employees. And last month, the Division released new guidelines for its field staff confirming a reversal of the previous policy which reserved the imposition of liquidated damages for rare and egregious cases.
Unsurprisingly, these policy changes have been accompanied, in our experience, by a change in temperament and approach from many WHD investigators knocking on employers’ doors and conducting investigations. We have seen more and more investigators push for the production of documents almost instantaneously, threatening to use the subpoena power or to impose civil monetary penalties and citing a regulation requiring employers to make documents available. for inspection within 72 hours of WHD’s request. Some quickly returned investigative findings to employers, sometimes with document requests still pending, both in FLSA cases and in the context of prevailing wage law. Requests for employers to enter into compliance agreements drafted by the WHD also appear to be gaining popularity.
The employers we work with are bound by their desire to do the good of their employees and to comply with the FLSA. The WHD and its investigators certainly want the same. But for many companies, the change in approach in the Division, from decision-makers at the top to executing agents in the field, presents a new kind of pressure that demands a different level of preparation.
So what can employers do in the face of increased pressure from WHD? Here are a few tips :
- Make sure the records are in order. The WHD has broad powers to request that records related to the FLSA should be kept under 29 CFR Part 516. All employers should take proactive steps to ensure that their records required under these regulations, as well as other documents relevant to the observance of pay hours, are in good repair so that they can be accessed and reviewed effectively. if the WHD comes knocking on the door.
- Be ready for the shot. Employers operating at multiple physical locations should ensure that frontline managers know what to do when an investigator from a government agency, including WHD, shows up in person, sends them a letter, or contacts them by phone. While investigators should be treated with the utmost respect, their inquiries should be promptly directed to a pre-designated point of contact who can help coordinate a response. We encourage employers to carefully consider what their response team and protocols should look like.
- Be respectful and reasonable. Responding promptly and respectfully to an investigator’s inquiries should help limit fireworks in a potentially flammable situation. Although the WHD has a fairly broad subpoena power, it is fair to question whether the division would get a lot of weight in the courts in the event that an employer does not oppose or block requests for investigator, but is simply asking for a more reasonable approach, be it in response times or the types of documents to be produced.
- Seek advice. With WHD becoming more zealous with its demands, both in terms of what needs to be produced and when, the potential for business disruption and missteps is greater than ever. We strongly encourage employers to retain the services of a lawyer familiar with these investigations to assist them. An experienced and knowledgeable lawyer can help manage the flow of information and work with the investigator to identify efficiencies to avoid overburdening an employer’s staff. If necessary, a lawyer can support employers who choose to challenge the WHD’s findings.
- Self verification. The FLSA statute of limitations forces employers to live with missteps for two (and sometimes three) years, and the termination of programs like PAID makes it more difficult to resolve these missteps decisively when identified. As a result, there is no time like today for employers to take reasonable steps to ensure compliance. The need is even greater in companies where employees perform different tasks or work in different contexts or circumstances, due to the pandemic. Areas of interest will vary by company, but at a minimum they should include exempt classification, recording all hours worked, and proper calculation of overtime pay. As stated in our updated last month, Seyfarth’s FLSA manual provides useful information on these topics, including:
- Chapter 14, “Compliance and Prevention Matters,” which provides an overview of the steps employers can take to comply with pay and hours laws, and an overview to help employers structure their own process. ‘self-assessment and resolve any issues identified during this process. .
- Chapter 7, “Exempt Employees”, which explains the most common minimum wage and overtime pay exemptions for “white collar workers”.
- Appendix 8, “Sample Job Evaluation Questionnaire Form,” which contains a set of practical and user-friendly recommendations to help employers review exempt classifications.
As those appointed by President Biden move into WHD, we expect to see enhanced enforcement not only under the FLSA, but also under the Davis Bacon Act, the service contracts and other laws in the division’s wheelhouse. Existing wage laws may represent an area of particular interest, given the Biden administration’s emphasis on infrastructure projects.
In short, employers must be prepared for a change in approach within the Division and be prepared to demonstrate and defend their compliance.