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Department of Labor Rules and Audits
The U.S. Department of Labor (DOL) is a department of the federal government that exists to ensure fair, safe, and healthy working conditions for employees by maintaining and enforcing federal laws regarding minimum hourly wage and overtime pay, protection against employee discrimination and unemployment insurance.
The federal minimum wage is $7.25 per hour effective July 24, 2009. There are also state minimum wage laws and in cases where this differs, the employee is entitled to the higher minimum wage.
Covered, nonexempt employees must receive overtime pay for hours worked over 40 per workweek at a rate not less than 1 ½ times the regular rate of pay. There is no limit on the number of hours employees over 16 years of age may work per workweek. There is no requirement to give overtime pay on weekends, holidays or regular days of rest unless overtime is worked on those days.
Under the Fair Labor Standards Act (FLSA), in order to provide a set salary, employees must meet the following criteria:
- The employee must be paid a predetermined and fixed salary that is not subject to reduction based on variations in hours worked.
- The amount of salary paid must meet a minimum specified amount (“salary level test”). Currently the standard salary level is $684 per week ($35,568 per year). Under the new rule from 2019, the employer may use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level.
- The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).
The DOL rules implementing the FLSA specifically categorize LPNs and LVNs as non-exempt, meaning they cannot be salaried and must be paid overtime. RNs may be considered exempt if they are paid at least $684 per week, and they meet the duty requirement for the learned professional exemption. Employers should also familiarize themselves with their local state laws, as they can sometimes differ from the Federal requirements.
In addition, an official poster outlining the requirements of the Fair Labor Standards Act must be displayed at the place of work.
Employers should keep in mind that the U.S. Department of Labor (DOL) can audit employers at any time, although the most common reason for an audit is a complaint from an employee. The DOL has also targeted employers in low-wage industries for wage and hour violations, particularly in the areas of agriculture, day care, food service, garment manufacturing, guard services, health care, hotels and motels, janitorial services and temporary help. By understanding the audit process and following the guidance below, employers will be better prepared for a DOL audit.
The DOL typically provides little advance notice of an audit. However, you can request time to gather records. Typically, the amount of time an employer will have will depend on the auditor.
Contact the auditor to find out specific information about the audit. Key questions to ask are the focus of the investigation (e.g., overtime pay compliance, exempt vs. nonexempt classification, minimum wage compliance), the time period for records the auditor wants to review, and the names of any employees that may be interviewed.
- Gather the records in accordance with guidance provided by the auditor.
- Be prepared to provide documentation related to the company compensation policies and procedures.
- Keep track of exactly what information was provided. Do not provide records other than what the auditor requests.
- Designate a company representative to work with the auditor. Some employers choose to designate their company’s legal counsel; other employers will designate senior managers. The representatives will have the duty to provide documents requested, arrange for any additional records to be provided to the auditor (if necessary) and coordinate employee interviews.
During the audit, be courteous to and cooperative with the auditor. It is a good practice to provide a quiet area for the auditor to work in.
At the end of the audit, ask the auditor to provide a summary of the results of the investigation. This information will help an employer review options for resolutions if any violations are found. If violations are found, employers are encouraged to consult legal counsel before any settlements are reached with the DOL.
To be proactive, employers should consider a self-audit, which consists of the following steps:
- Review job descriptions.
- Understand both federal and state law and ensure the employer is in compliance.
- Ensure that FLSA classifications are correct.
- Keep accurate payroll records.
- Apply policies consistently.
- Make sure all records are complete and work to resolve any inconsistencies.
- Determine how to address any areas of concern identified via the self-audit.
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Department of Labor Rules and Audits
The U.S. Department of Labor (DOL) is a department of the federal government that exists to ensure fair, safe, and healthy working conditions for employees by maintaining and enforcing federal laws regarding minimum hourly wage and overtime pay, protection against employee discrimination and unemployment insurance.
The federal minimum wage is $7.25 per hour effective July 24, 2009. There are also state minimum wage laws and in cases where this differs, the employee is entitled to the higher minimum wage.
Covered, nonexempt employees must receive overtime pay for hours worked over 40 per workweek at a rate not less than 1 ½ times the regular rate of pay. There is no limit on the number of hours employees over 16 years of age may work per workweek. There is no requirement to give overtime pay on weekends, holidays or regular days of rest unless overtime is worked on those days.
Under the Fair Labor Standards Act (FLSA), in order to provide a set salary, employees must meet the following criteria:
- The employee must be paid a predetermined and fixed salary that is not subject to reduction based on variations in hours worked.
- The amount of salary paid must meet a minimum specified amount (“salary level test”). Currently the standard salary level is $684 per week ($35,568 per year). Under the new rule from 2019, the employer may use non-discretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level.
- The employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).
The DOL rules implementing the FLSA specifically categorize LPNs and LVNs as non-exempt, meaning they cannot be salaried and must be paid overtime. RNs may be considered exempt if they are paid at least $684 per week, and they meet the duty requirement for the learned professional exemption. Employers should also familiarize themselves with their local state laws, as they can sometimes differ from the Federal requirements.
In addition, an official poster outlining the requirements of the Fair Labor Standards Act must be displayed at the place of work.
Employers should keep in mind that the U.S. Department of Labor (DOL) can audit employers at any time, although the most common reason for an audit is a complaint from an employee. The DOL has also targeted employers in low-wage industries for wage and hour violations, particularly in the areas of agriculture, day care, food service, garment manufacturing, guard services, health care, hotels and motels, janitorial services and temporary help. By understanding the audit process and following the guidance below, employers will be better prepared for a DOL audit.
The DOL typically provides little advance notice of an audit. However, you can request time to gather records. Typically, the amount of time an employer will have will depend on the auditor.
Contact the auditor to find out specific information about the audit. Key questions to ask are the focus of the investigation (e.g., overtime pay compliance, exempt vs. nonexempt classification, minimum wage compliance), the time period for records the auditor wants to review, and the names of any employees that may be interviewed.
- Gather the records in accordance with guidance provided by the auditor.
- Be prepared to provide documentation related to the company compensation policies and procedures.
- Keep track of exactly what information was provided. Do not provide records other than what the auditor requests.
- Designate a company representative to work with the auditor. Some employers choose to designate their company’s legal counsel; other employers will designate senior managers. The representatives will have the duty to provide documents requested, arrange for any additional records to be provided to the auditor (if necessary) and coordinate employee interviews.
During the audit, be courteous to and cooperative with the auditor. It is a good practice to provide a quiet area for the auditor to work in.
At the end of the audit, ask the auditor to provide a summary of the results of the investigation. This information will help an employer review options for resolutions if any violations are found. If violations are found, employers are encouraged to consult legal counsel before any settlements are reached with the DOL.
To be proactive, employers should consider a self-audit, which consists of the following steps:
- Review job descriptions.
- Understand both federal and state law and ensure the employer is in compliance.
- Ensure that FLSA classifications are correct.
- Keep accurate payroll records.
- Apply policies consistently.
- Make sure all records are complete and work to resolve any inconsistencies.
- Determine how to address any areas of concern identified via the self-audit.