What to Know About a Wage and Hour Investigation – From a University That’s Been There
One CUPA-HR member institution was recently the subject of a Department of Labor wage and hour investigation. While the university wishes to remain anonymous, its experience can serve as a learning opportunity for other institutions.
“It seemed to come out of nowhere,” according to a member of the university’s HR department. “And the investigation got underway very fast — we didn’t have a lot of time to prepare.”
The Department of Labor (DOL)’s Wage and Hour Division (WHD) enforces, among other things, federal minimum wage, overtime pay, recordkeeping and child labor requirements of the Fair Labor Standards Act. According to DOL’s website, “the WHD conducts investigations for a number of reasons, all having to do with enforcement of the laws and assuring an employer’s compliance. WHD does not typically disclose the reason for an investigation. Many are initiated by complaints, and all complaints are confidential.”
In the case of this university, WHD conducted an audit on an entire division — approximately 250 positions (all current full-time and part-time employees as well as all employees terminated within the past two years).
The Investigation Process
The investigation process began with an opening conference with the investigator and university representatives. “Then, surprise! The investigator informed us right after that meeting that she was heading straight to the division in question to begin her interviews with employees,” says the HR team member. “That was unexpected. We thought we’d have a little time to prepare.”
The investigator in the opening conference requested the following information for the division she was auditing:
- Official information – legal name, organizational chart, federal employer identification number, etc., for that division
- List of all employees with address, phone number, hire/termination date, hourly rate of pay/salary, job title, exempt/non-exempt and 1099 contractors
- Payroll and time records for each employee for each pay period for the past two years showing hours worked, rate of pay, gross pay, deductions, net pay
- A full payroll register for last pay cycle for each pay frequency
- Birth dates of all employees under age 18
- Family and Medical Leave Act (FMLA) policy or handbook outlining leave policy and a copy of the current FMLA public notice (the investigator also reviewed the required FMLA notices and where they were displayed and questioned employees and supervisors on whether they were aware of FMLA policies and how to request leave)
“In addition to the initial information she requested, during the course of the investigation the investigator regularly requested follow-up and additional information, including designation of exemption criteria used for all exempt employees; job descriptions for select positions; justification for exempt classifications of certain employees; and back-up records of daily hours worked for non-exempt employees,” according to the HR representative.
Results of the Investigation
The investigative process lasted four months, and the results of the audit found that:
- Nine positions were misclassified as exempt
- The institution had no back-up record of hours worked for interns in that division
- There were violations related to minimum wage, overtime payments and recordkeeping
“We ended up paying $26,000 in back wages to 10 individuals and $32,000 in subsequent back wages,” says the HR representative.
The HR team learned some valuable lessons as a result of the unexpected wage and hour investigation — lessons they hope other institutions will heed in order to be ready if DOL comes knocking.
- Examine all written job descriptions. Do they accurately reflect the work being done? Have they been updated where necessary? Can you justify the applicable exemptions?
- Conduct internal wage and hour audits. Regularly request back-up records of daily hours worked for non-exempt staff; interview employees about FMLA, tracking hours worked and job duties; and regularly review timekeeping procedures and recordkeeping policies.
- Train employees on applicable DOL regulations – timekeeping, recordkeeping obligations, FMLA, etc.
- Review timekeeping systems. Are recordkeeping policies and procedures current, accurate and compliant? Does your timekeeping system allow for convenient entry of hours worked? Do employees and supervisors understand compensable vs. non-compensable time?
They’ll Be Back
As the investigation at the university was wrapping up, the investigator had some parting words: “Once you are in our system, it’s highly likely that we will return.” Next time, says the HR representative, they’ll be ready.
Wage and Hour Investigation Checklist