The old adage is right on – prepare for the worst and hope for the best. In this case, my spring cleaning tip #3 is to review your policies, practices and records as if the U.S. Department of Labor (DOL) were to investigate your business practices tomorrow. A few issues I’ve dealt with (a lot) this year are listed below:
- Verify employees are properly classified as exempt/non-exempt.
- Pay particular attention to sales employees, marketing, and office workers.
- The DOL overtime regulations overhaul is still on hold pending the Trump administration’s decision whether to pursue the appeal. However, as I mentioned before, the DOL’s revised salary threshold was not all that far from what is usually reality for what an exempt person makes in many industries (excluding small business owners, small towns, etc.). Point is, just because it is on hold does not mean you shouldn’t ensure that salaried employees meet the duties test (and current salary threshold).
- Ensure independent contractors are properly classified.
- Have a contract with the entity, and keep records of payments made and Form 1099s.
- Think twice before a former employee is made an independent contractors…no matter how badly the individual asks for it.
- Be sure you are properly calculating travel time for non-exempt employees. I’ve blogged about this in the past as this can get very tricky.
- Ensure employees are provided “sufficient time” to eat a meal. Record meal time on time cards for hourly employees.
- Recordkeeping – these are the easiest violations to spot. You’ve either kept the required records or not.
- Have a document retention policy and use it.
- Have employee time cards accessible for three years.
- Have payroll stubs/history and employee wages accessible for three years, including W-2s.
Keep in mind that, should you receive a visit, the DOL investigator is just there to address and audit compliance with federal wage and hour laws. I just sat in an audit where the DOL investigator instructed the employer as to a withholding issue that is inconsistent with Minnesota law. Accordingly, recall that just because the FLSA permits something, does not mean that Minnesota law allows it. If Minnesota laws are more strict (advantageous to employee), Minnesota law must be followed instead.