Don’t End Up in the DOL Doghouse

How to survive an audit of your pet business when the Department of Labor comes knocking.


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I often refer to wage/hour claims as the most “dangerous” employment law claim a business can face. The majority of businesses are subject to both state and federal wage/hour laws. If your business grosses $500,000 or more per year, you are covered by the federal wage/hour law, a.k.a. the Fair Labor Standards Act (“FLSA”). Even if your gross is under $500,000, your individual employees can still be covered if they are engaged in interstate commerce. When something goes wrong, the consequences can be severe—the employer can be liable for back wages, liquidated (double) damages, attorney’s fees and costs on both sides. Moreover, liability can flow not only to the business, but also to owners and supervisors.

 

The Department of Labor (“DOL”) is the federal agency charged with enforcing the FLSA. The DOL has the power to show up unannounced (check for a badge), then demand the employer produce documents, permit inspections and allow employees to be interviewed. This is the dreaded DOL audit. While businesses cannot stop the DOL from auditing, they can be prepared, which can ease the pain of the audit, and help limit any findings of back wages owed.

 

 

So, how can you best prepare your pet store for an audit? Records! Covered businesses are required to post the “Employee Rights Under the FLSA” poster at their worksites. Additionally, employers are required to keep the following records for all non-exempt employees:

  • Full name
  • Social security number
  • Address
  • Birthdate (if under 19)
  • Sex
  • Occupation
  • Time/day of week when the employee’s workweek begins
  • Hours worked each day
  • Total hours worked each workweek
  • Basis on which the employee’s wages are paid (i.e. $9/hour, $400/week, etc.)
  • Regular hourly rate
  • Total straight time earnings
  • Total overtime for each workweek
  • All additions or deductions from wages
  • Total wages paid each pay period
  • The date of payment covered by each paycheck

 

According to the DOL, employers must keep these records for at least three years (check your state law to see if you must keep them longer).

 

If the DOL comes knocking, having these records is the first step to survival. Another thing the DOL will inevitably review is the classification of each employee as exempt or non-exempt. Make sure your exempt employees properly meet one of the recognized exemptions—titles alone do not count.

 

Timekeeping is always important as well. Though there is no required format, you must make sure your non-exempt employees are properly tracking
their time. Finally, the DOL will check to see if you are properly paying overtime to eligible employees. Make sure you are tracking time on a workweek
basis—i.e. the same seven day period every week—then make sure non-exempt employees are paid overtime for all hours worked over 40 each workweek.

 

Having the government knock on your door is generally not a pleasant feeling. Though it is impossible to completely prevent an audit, these tips should help you best position your pet store to avoid significant issues…and, of course, the DOL doghouse!

 

Suzanne Boy is an employment lawyer who is passionate about assisting her clients with all aspects of employment law and HR-related issues. Suzanne regularly assists her clients with employee handbooks; wage/hour audits; supervisory training; and employee termination, leave, and disciplinary issues. She strives to help clients proactively and cost-effectively resolve workplace issues. When litigation cannot be avoided, Suzanne represents her clients in all types of employment litigation. She frequently speaks to business and professional groups on various employment matters, and serves as the lead writer of the firm’s employment law blog.

 

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