On February 1, 2022, the United States Department of Labor Wage and Hour Division ("DOL") announced plans to hire 100 additional investigators to support its compliance and enforcement efforts. DOL oversees the enforcement of several federal laws, including the Fair Labor Standards Act ("FLSA") and the Family and Medical Leave Act ("FMLA"). We are already seeing a significant increase in on-site DOL audits. With the increase in audits, employers should be proactive in ensuring compliance with federal law because DOL audits can lead to substantial monetary exposure for employers.
DOL may audit an employer randomly or following an employee complaint. Certain targeted industries are more likely to have random audits, such as food services, construction, agriculture, and healthcare. Additionally, DOL is more likely to randomly audit certain targeted areas, including Texas. Other events that may trigger an audit include union complaints, overlap of W-2 and 1099 forms for the same worker, an unemployment or workers' compensation claim filed by an independent contractor, or receipt of an IRS SS-8 Form seeking government determination of classification status from an independent contractor. DOL does not typically disclose the reason for an investigation to the employer.
A DOL audit generally proceeds as follows:
Although not required, in many cases, the investigator provides advance notice of...
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