Navigating a DOL Investigation: Don't Pay $200, but Don't Go to Jail Either

Sometimes a news headline leaves you scratching your head in wonder, as happened to me this morning when I saw the title of a recent U.S. Department of Labor (DOL) press release. The caption that caught my eye said: “Federal Court Orders Detroit Business Owner Imprisoned Until She Complies With U.S. Department of Labor Subpoena to Provide Documents.”

What is shocking about someone being jailed for refusing to comply with a subpoena? In some contexts, nothing. However, a routine DOL investigation is not supposed to go so awry. (Admittedly, I do not know the facts of this case beyond what DOL's press release says.)

DOL may decide to investigate an employer as a follow-up to a prior investigation, based on an employee complaint, as part of a focus on employment practices in a specific industry, or randomly. What is an employer supposed to do when notified of a planned DOL investigation – whether under the Fair Labor Standards Act, Service Contract Act, Davis Bacon Act, or one of a host of other laws enforced by DOL's Wage-Hour Division? Quite simply, the employer should cooperate.

As DOL's press release notes, “The opening of a Wage and Hour Division investigation does not mean we will find violations." And even if DOL does find violations, they usually do not rise to the level of crimes, so employers need not fear jail time or huge punitive fines. Typically, an employer may be assessed back wages (which can be significant) and, perhaps, interest, but that usually will resolve the matter. Cooperating with an investigation may give the employer some say about how DOL calculates back wages. Cooperation also can be a mitigating factor when DOL or a court determines other consequences of any violations. In contrast, impeding a DOL investigation can be a crime (as the above press release demonstrates). Also, failure to cooperate can lead to consequences such as having your business placed under long-term court supervision or debarment (exclusion) from government contracting.

Cooperating does not mean "rolling over and playing dead.” While various laws require employers to keep certain records and to make them available to DOL, producing records does not mean that you agree with the interpretation DOL gives those records. And it does not mean that you acquiesce in whatever findings DOL presents you with at the conclusion of its investigation. (Note that the agency does not need a court order or a search warrant to see an employer's records; it just needs to ask for them. Indeed, DOL even has the right to request data in a specific format – for example, asking the employer to export data to an Excel spreadsheet. Also, employers also must allow DOL to interview employees.) 

DOL will present its findings at an exit interview. If you do not agree with DOL's conclusions, do not sign anything at that interview. The overwhelming majority of DOL investigators are consummate professionals who respect the fact that employers may have defenses to DOL's claims. On rare occasions, a DOL investigator may attempt to bully an employer into signing on to DOL's findings. Don't be cowed, but don't lose your cool either. Don't let DOL collect the proverbial $200, but don't go to jail either.

For more information about handling a DOL investigation, please get in touch with this writer or with your usual Brown Rudnick contact.