In all too many cases the first time an employer takes a critical look at its own wage and hour practices is in the context of an FLSA audit conducted by the Department of Labor. This is less than ideal because the employer has no opportunity to fix or correct issues on its own terms. If the DOL determines a violation has occurred, it will require the payment of back wages (typically going back two years) and depending on the facts and circumstances it can also require liquidated damages (effectively doubling the back wages). In extreme cases or those involving repeat offenses, DOL can impose additional monetary fines known as civil money penalties.
The good news is that employers don’t have to wait for the DOL to knock on their door to internally assess their wage and hour compliance. Self-audits are an effective tool for this purpose. They can be tailored to the particular employer’s needs in order to stay cost-effective, but provide the most benefit when the scope is similar to what the DOL would do.
Not only does the audit help with overall compliance, but it also demonstrates the employer’s good faith intent to comply with the FLSA.. This can be critical in litigation because it helps to refute the showing of willfulness that the plaintiff will be trying to make in order to extend the period of potential recovery (i.e. statute of limitations) from two years to three years.
There are additional benefits to having legal counsel involved in the audit; namely, potential protection of the audit findings under the attorney-client privilege. This doesn’t mean, however, that counsel has to handle every single detail. The optimal audit is one where counsel works with the client to oversee the audit, identify potential issues, offer suggestions and advice as to means of resolution, and be available to assist where necessary and appropriate, all of which is always subject to the client’s control.
Foulston Siefkin has attorneys who are experienced with defending clients through DOL wage and hour audits, which makes us well-versed to assist with your self-audit. If we can be of service in this area, please contact Forrest Rhodes
(Wichita) or Jeff Hurt