US DOL Audits On The Rise

Over the last couple of years, I have seen a dramatic increase in US Department of Labor investigations and audits for smaller and medium size businesses that barely meet the minimum requirement of gross income to come within the purview of the Federal Act. Why is this?

Although I am sure there are many answers to the question, I have a few thoughts on the subject. First, I think there may be some directive from the current administration to try and clean up what may have been a long-standing practice of misclassifying employees as contractors. Second, I think with a better economy and more jobs, disgruntled employees are less shy in making complaints. These complaints usually go to appropriate classifications in the exempt category and over time not being paid. Third, we simply may be seeing a situation in which the economy has improved so much that there are more businesses; and, thus more investigations.

Notwithstanding what the rationale for the increase that I have seen may be, I can issue a word of caution. If you have a business that comes within the purview of the Federal Act, you probably want to take a look at your classifications and payment schedules. It would be important to take a proactive approach rather than a reactive approach. Why? A Department of Labor investigation can be quite time-consuming and take you away from doing your business. I could point you to a number of my clients who would certainly concur with that assessment!