DOL Investigations: Check their Math!

"Do not worry too much about your difficulties in mathematics, I can assure you that mine are still greater."

— Albert Einstein

Months ago, you received an “appointment letter” from the Department of Labor (DOL) informing you that it has scheduled an investigation of your company. You cooperated. You complied. But, wait a minute, something doesn’t add up. Should you question it? Perhaps.

First, let’s review what happens during a DOL wage and hour investigation. When you received that appointment letter, you wondered — why me? Investigations often are initiated because one of your employees complained to DOL. Others are initiated because DOL is interested in the practices of particular kinds of employers. Regardless of how they land on your doorstep, the Fair Labor Standards Act authorizes DOL to investigate, gather data, interview employees, enter and inspect work sites and review records as well as to gather data about hours worked and compensation paid. It can be quite intrusive; however, employers are generally obligated to comply with the investigator’s requests.

For federal service contractors, you may be required to provide information about the Service Contract Act (“SCA”) covered contracts your company has. And, you might be required to provide not only payroll and data regarding hours worked by employees, but also information about your company’s benefits to ensure that the company is in compliance with SCA mandated health and welfare requirements. And for the Davis-Bacon Act (“DBA”) audits, you will have to prove you paid the prevailing wages and benefits set forth in your certified payrolls.

Moving on, you cooperated fully with the investigation, which we would humbly suggest be done with the benefit of counsel, particularly if we are talking SCA or DBA, since debarment may be in the picture. You provided the documents the investigator requested, you made employees available for interviews, and you took care to avoid the appearance of trying to affect your employees’ cooperation with the investigation.

After some time passed, the investigator contacted you to schedule an “investigation conference.” At the conference, the investigator explained the findings of his or her investigation. If the investigator has found a violation, you will be told what they believe occurred. Perhaps you classified employees as exempt when they weren’t. Or, you might have classified their job incorrectly under positions set forth in a wage determination in your government contract. In any event, they will tell you what they found and may seek your agreement to correct the practices that were identified. In addition, they may have calculated back wages that they believe were not paid.

Now you have a key decision point that’s a much tougher call than the question of whether to cooperate with the investigation. Should you take the investigator’s findings at face value? Should you argue with DOL when you think they’re wrong?

Over the years, it has been our experience that you should take time to review the investigator’s conclusions. DOL investigators instinctively focus on securing as much as they can for employees. That is how they have been trained and they are just doing their job. In doing so, it’s not unusual, say, for an investigator to downplay an employee’s level of discretion in the performance of what would otherwise be exempt administrative duties. Or, the investigator might upgrade another employee’s level of independence to find that the individual holds a higher level position that qualifies for higher pay under an SCA wage determination.

These kinds of questions might be worth arguing about; however, you have to make your choice in the context your company’s overall needs. Would accepting a borderline finding lead to higher costs in other business units because you didn’t question the fairness of the conclusion? Would pushing back lead to further questions and a deeper investigation when there’s not much to be gained if you won the argument? These aren’t easy questions and feel free to ask for a little time to be thoughtful as long as you convey an attitude of compliance and cooperation. Most DOL investigators are trained to pressure the employer to act rapidly, even as DOL takes its own leisurely time. But a competent investigator will accommodate such requests if they perceive that your company is a good egg as opposed to one that skirts the rules at every turn.

At the end of the process, the investigator, or you, will determine how much back pay is due. Which brings me back to my starting point: check their math! Literally in the last two days, I have seen two rather big mistakes. In one instance, an investigator said overtime pay was owed when multiple employees had worked well under 40 hours. Without getting into minutiae, the investigator applied a finding across the board rather than limiting the finding to those workers who had more than 40 hours on the clock. In the other, the investigator’s math resulted in amounts owed that were less than what our client believed were owed. Hence, it makes sense to check even the little things.

While it may seem self-serving, the expense of legal counsel may save you a lot of money and trouble later. Legal advice before an investigation may reveal problems that you can fix before the knock at the door. Problems repaired today are problems avoided tomorrow. If a DOL investigation arises, good legal advice from counsel who has experience dealing with the DOL can help you navigate the tough choices.

And, your counsel can check the math too.