Wage & Hour Counsel : Wage & Hour Lawyer & Attorney : Littler Mendelson Law Firm : Employment Law, Labor Relations

With this announcement, Secretary Solis promised, "America's workers should rest assured that protecting worker rights is a top priority at the Department of Labor." Her press release warned, "[t]here is no excuse for employers who disregard federal labor standards--especially those that are designed to protect the most vulnerable in the workplace."

Broad Investigative Powers

The Department's Wage and Hour Division investigates allegations that employers failed to pay minimum wage or overtime, as well as alleged misclassification of employees as exempt or independent contractors.¹ DOL investigations can be triggered by complaints from employees, unions, or competitors, and routine audits also can be performed, often focusing on a particular industry or type of employer.

The Department has broad investigative powers, including the power to subpoena employment records. Assuming wage and hour violations are discovered, the Department will seek a settlement. If an out-of-court agreement is not reached, the Department can sue to enjoin an employer's violation of the law as well as to compel the payment of back pay to all employees. The Department also has the power to seek reinstatement with back pay of any individual employee who was discharged for attempting to enforce the law.

Should the Department bring suit and prevail, it will recover liquidated damages equal to the unpaid wages the employer owes, unless the employer can prove that it acted in good faith with a reasonable belief that its pay practices complied with the law. Interest and attorney's fees are likely to be awarded as well, even if liquidated damages are not.

Significant Settlements

The threat of such enforcement actions can result in employers agreeing to settlements that provide significant recoveries. For instance, in July 2009, the Department announced a settlement of almost $750,000 with a convenience store chain in nine states accused of failing to properly include performance-related bonuses in the regular rate used to calculate overtime pay.

The Department also is planning a "public awareness campaign" to inform workers of their "rights," which presumably also will assist the Department in finding errant employers to investigate and prosecute.

Wake-Up Call

The federal government's increased manpower and desire to enforce federal labor standards should be a wake up call to United States employers to ensure that their procedures and practices comply with federal labor laws.

Audits conducted by or through counsel can catch technical problems with pay practices, recordkeeping, and employee classification that can be corrected to reduce exposure. Training of managers in employment laws such as when overtime is required can avoid violations caused by managers' ignorance of legal obligations.

These proactive steps can save employers the expense and embarrassment of reacting to a government investigation or a costly class action.

This entry was written by Alison Hightower.

¹ The Wage and Hour Division also governs the hours and conditions for employment of children under 16 years old and it enforces the labor standards provisions of the Immigration and Nationality Act (INA) that apply to aliens authorized to work in the U.S. under certain nonimmigrant visa programs.

In addition to the FIL Training guide, the Department also produced copies of the handwritten employee interview summaries prepared by the investigator on the Department’s “Employee Personal Interview Statement” (WH-31) form. Together, these materials provide a fascinating glimpse into the Department’s internal thinking and strategies on how to conduct employee interviews during FLSA investigations. Some of the key points emphasized in the FIL Training guide include:

• The importance of including the Department’s legal counsel, the Solicitor of Labor (SOL), in the investigation process and consulting with the SOL on “the kind and amount of information needed from interviews in order to resolve the issues presented.” In other words, employers should always assume that the Department is actively consulting with its attorney and preparing for potential litigation during the course of an FLSA investigation.

• The method for determining how many employee interviews should be conducted by the investigator in order to produce a “representative sample.” As explained in the FIL Training guide, with a “small number of affected employees (10 or less), it is reasonable to interview all of them.” By contrast, the guide recommends that with a “large number of employees (100 or more), interview about 20%.”

• Specific suggestions on interview techniques and styles that Department investigators can use to put “an employee at ease” and facilitate “the free flow of pertinent information.”

• The Department’s preferences on interview locations and methods (“[p]ersonal face-to-face interviews are the best method,” while “[t]elephone interviews are acceptable” and “[m]ail interviews are the least desirable”).

• The suggested form and substance of the signed employee interview statements each investigator is required to prepare and obtain at the conclusion of employee interviews.

• The requirement that investigators “evaluate the demeanor, articulateness, self-confidence, and other appropriate characteristics of each witness,” and document that evaluation for future use by the SOL to “determine which employees will be the best witnesses” against the employer in any future litigation.

Each year the Department receives 25,000-30,000 new employee wage complaints under the FLSA. Although only about one percent of these complaints end up in court, the Department’s FIL Training guide shows that the Department conducts each investigation with the understanding that it may result in contested litigation. Given this policy, and the detailed training materials and methods used by the Department to prepare for the possibility of litigation, employers need to ensure that they devote the same time and effort to preparing their response to FLSA wage and hour investigations.

This blog entry was authored by Douglas E. Smith.