Checklist for Proactively Avoiding a DOL Audit

While the dreaded Department of Labor (DOL) or Wage and Hour Audit for HR compliance might seem like the big bad wolf arriving at your door seeking only to do you harm, it’s quite manageable if you make time for periodic self-audits. 

Is the DOL Against Businesses?

No! In fact, the Department of Labor is far from the bad guy. Just consider their mission statement as further proof the DOL’s mission is:

“To foster, promote, and develop the welfare of the wage earners, job seekers, retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.” 

As you can see, that mission statement proves the DOL is far from your enemy as a business owner. Instead, they are simply wanting to make sure that each and every employee is treated fairly. If you treat your employees fairly, a wage and hour audit shouldn’t be a big concern at all. In fact, wage and hour audits happen more than you think, they are fairly commonplace. Compliance, of course, is a must, and even a single employee complaint can launch an audit. 

How Common Are Audits?

As mentioned above, audits are much more common than you might imagine. In fact, according to an HR Management and Compliance article, in 2017, the DOL conducted audits all over the country and found some $270 million in back wages owed to employees. Interestingly enough, the most common wage and hour law violations involve youth employment, but that is far from the only violation found.

Importance of a Self-Audit

Since even one employee’s complaint can launch a wage and hour audit by the DOL, it’s a good idea to get ahead of the game and go ahead and perform regular self-audits. This will ensure that if and when a DOL audit happens, you are ready. It’s a good idea to designate one person to be in charge of compliance and then listen to their recommendations to ensure compliance throughout your company. 

Self-Audit Checklist

While you might find the following checklist arduous, it’s much better to perform this audit on yourself than to wait for the DOL to come calling. This self-audit checklist will ensure everything is in order, so if you ever face an audit, you will know you can and will pass with flying colors:

• Review job descriptions regularly to make sure that they are FLSA and ADA-compliant, as well as accurate to the expectations for the role.
• Know your state and federal laws in terms of wage and pay. Learn which ones apply to your business and make sure you are meeting all state and federal regulations. 
• Know your FLSA classifications and make sure they are correct. 
• Make sure your payroll records are accurate and that all employees are paid for all time worked.
• Ensure your company policies are enforced consistently, not just for some employees but not others.  
• Keep complete records and make sure they include the following vitally important aspects.
  • Payroll records
  • Timecards/sheets
  • Canceled payroll checks
  • Youth employment certificates
  • Fully and accurately completed I-9 forms
• Make sure that the appropriate wage and hour law posters are posted at your business facility in an area where all employees can reference them, such as the break room.
• Ensure that your fringe benefits policies are written and accessible to employees.
• Make sure that your workers’ compensation policies are written and accessible to employees.

No One Wants to be Audited

Admittedly, no one likes to think about being audited. Even more so, no one likes to be audited. However, by performing the self-audit as outlined in the checklist above, you will ensure that you are prepared if or when the audit process happens. Being prepared is your best course of action to protect against an audit. If you need help or have questions, please contact TPC for more information. We understand that the nuances of the wage laws can get confusing. We are here to help ensure you are compliant, so there is no fear of problems if you face an audit from the DOL.

Originally published 5/29/21 - Updated 6/5/23