Five Tips for Avoiding a Department of Labor Audit

In our prior post, we highlighted five tips for employers dealing with a Department of Labor (DOL) audit. However, as an employer, you want to avoid the hassle and costs associated with a DOL audit. An audit can be a time-consuming and expensive process, with potential penalties and legal fees adding up quickly. Therefore, it's crucial for employers to take proactive steps to avoid a DOL audit.

Here are five tips for employers to do just that:

1. Classify employees correctly

Misclassifying employees can be a common trigger for a DOL audit, particularly in New Jersey. Employers should be aware of applicable laws regarding employee classification and ensure their workers are classified correctly as either employees or independent contractors. Employers should work with knowledgeable employment law counsel to understand the factors used to determine the classification of their workers and assess whether there is any potential risk with their current classifications.

2. Keep accurate records

Employers are required to keep wage and hour and other employment records. For example, employers must maintain records of all hours worked, wages paid, and benefits provided to employees. Failure to keep these records can result in mistakes, or disagreements with employees, that could prompt a DOL audit.

3. Comply with wage and hour laws

Employers should review their policies and procedures to ensure compliance with federal and state wage and hour laws. Regularly reviewing and updating policies and procedures can help prevent wage and hour violations, and resulting DOL audits.

4. Conduct internal audits

Employers should conduct regular internal audits to ensure compliance with applicable federal and state laws. Such an audit would include a review of payroll records, benefits, and employee classifications. Employers should seek assistance from counsel when performing internal audits to ensure the audits are performed correctly and to check for compliance with all applicable laws.

5. Train managers and supervisors

Finally, employers should train managers and supervisors on federal and state labor laws. This includes wage and hour laws, employee classifications, and record-keeping requirements. Training can help managers and supervisors understand their obligations and responsibilities, reducing the risk of violations that could trigger a DOL audit.

In conclusion, taking proactive steps to avoid a DOL audit is crucial for employers. Proper employee classification, accurate record-keeping, compliance with wage and hour laws, regular internal audits, and training for managers and supervisors can help employers stay in compliance with applicable laws and avoid costly DOL audits.

If you have questions about your business’ employment practices or policies, please schedule a complimentary consultation with us through our online scheduling system.

Information contained in this blog is provided for informational purposes and does not constitute legal advice or opinion. You should consult with an attorney regarding the specifics of your matter or legal issue.