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August 10, 2016 by
aliereadvisors
Any audit can be a scary thing, and a Department of Labor audit is no exception. They can come with little warning, last a long time, and can look into a range of violations. The best time to prepare is well before the DOL decides to audit you, but if you just received notice that an audit is imminent, here are some things to expect.

Timing

There is usually very little warning before an audit – some companies have had two days notice before an audit. You can try to request more time to prepare, but the length of time granted will depend on the auditor.

Subject

The DOL can audit for a number of concerns, which may be triggered by an employee complaint or a suggestion from the IRS, among other things. Things the audit may be looking into include:

  • recordkeeping of wages and hours
  • overtime compliance
  • child labor concerns
  • proper classification of employees
  • employees taking proper breaks and being paid for all hours worked
  • verification of independent contractors
  • Family and Medical Leave Act (FMLA) compliance

You can contact your auditor before the audit begins so that you can better prepare. Ask what the main focus of the investigation will be, what time period they are looking at (so that you can pull records,) and which employees they plan to interview.

Records

The auditor will request specific records, so provide only the records the auditor requests. Plan to provide information on the company’s compensation policies and procedures. If you work with a PEO, the PEO company will likely have many of the records you’ll need.

Representatives

You should designate a representative to work with the auditor. You may consider having a lawyer do this job, though it could be an employee. If your company does not have legal counsel, consult your PEO to see if they have legal counsel available to you. The representative will arrange for and provide the requested records to the auditors and schedule interviews with employees. Note that the company’s lawyers may be present in interviews with management (where they are explaining policies,) but not with employees.

Location

The auditor will come to you, so give them a nice, quiet place where they can set up shop. Make sure that you have all legally required DOL posters up before the auditor arrives: they may take photos of the posters as part of the audit.

In the End

Once the audit is done, ask the auditor for a summary of their findings. If the auditor found any violations, consult legal counsel before agreeing to any settlements. Again, if your company does not have their own legal counsel, contact your PEO to see if you have access to theirs.

The best way to prepare for an audit is to keep your company compliant so that any audit won’t find any violations. Partnering with a PEO can make this easier, because some PEOs can provide employee handbooks, management training, payroll services, and even legal resources. So start preparing for a DOL audit now, before you get notice that one is about to happen.

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