Things You Need to Know About Department of Labor Audits

By hrlineup | 21.12.2020

If you run a business or prepare payrolls for that matter, you should know a thing or two about the Department of Labor (DOL) audits. That’s because onsite audits have become common these days. Therefore, you shouldn’t wait until the auditor finds you flat-footed.

But what are the primary reasons for the compliant specialist to come knocking? Could it be just bad luck, employee complaints, or even Form 5500 errors?

Let’s find out!

What is the Department of Labor (DOL) audit?

First of all, the DOL (Department of Labor) is the federal agency mandated to regulate and enforce employment laws. With the DOL, employers must adhere to specific rules and regulations like the Fair Labor Standards Act (FLSA), Employee Benefits Security Administration (EBSA), Occupational Safety & Health Administration (OSHA), Wage & Hour Division (WHD), among others.

In a nutshell, a DOL audit is an internal investigation by the DOL to find out if an employer complies with all employment laws, especially WHD.

Reasons for Department of Labor Audit

There are multiple reasons for a Department of Labor audit. That said, employee complaints are the major catalysts for a DOL audit. Dissatisfied workers might complain to DOL about unfairness (actual or perceived) at the workplace. Therefore, keeping your workers happy is a sure way of preventing a DOL audit.

Compliance officers can also audit employers for Form 5500 errors. Although this might sound obvious and avoidable, most mistakes are usually very minor. For example, you might fail to answer multiple part questions or fail to comply with EFAST 2 Electronic Filing Guidance.

What Does the Department of Labor Investigate?

Most of the time, an auditor will be looking to make sure that an employer keeps proper records and find out if the employee complaints are true or false.

So, to pass a DOL audit, your documents should have the following qualities:

  • Reflect the employees’ wages and hours worked
  • Comply with FLSA (Fair Labor Standards Act) rules
  • Nonexempt employees payment according to hours worked, including overtime

DOL Investigation Procedure

Typically, you’ll receive a notification letter informing you to prepare you for the Department of Labor audit procedure. However, it’s also common for DOL officers to show up without prior warning.

After investigations, the compliance specialist will discuss with you the violations (if any) and suggest corrective measures.

Luckily, you can always request for more time to provide additional information that might change the officer’s mind. Also, you can opt to challenge the findings in a DOL hearing.

Final Thoughts

A proactive employer should always be a step ahead of a DOL audit by conducting regular self-audits. To achieve this, keep accurate payroll records, review job descriptions and work policies, and of course, apply policies consistently. In short, abiding by all state and federal employment laws should keep away the snoopy DOL investigator.