What Triggers a DOL Investigation?
Can minimum wage concerns trigger a DOL or state labor department audit?
Yes. Minimum wage concerns can trigger an investigation. At the state level, you’ll see more minimum wage cases. At the federal level, you’ll see many overtime cases. These can be relatively easy for the Department of Labor (DOL) to investigate and prosecute when employees haven’t been paid time-and-a half for their work.
A common issue arises when a business pays the correct minimum wage or overtime rate but doesn’t track tips. An employee may also make a false complaint. Even without good records, the DOL can still investigate.
For help with wage and hour compliance, see Atom Law Group’s employment law representation services and labor audit representation services.
What employers should know
- In some circumstances, employers may pay a base wage below the minimum wage.
- Without good records and accurate tip tracking, employers may not know whether employees have been paid the correct amount.
- In a tipped workplace, tips may count toward an employee’s income when the employer pays a lower base wage. This can raise issues if the employee’s total pay does not meet the applicable minimum wage.
- If an employee’s compensation doesn’t add up to the minimum wage under the applicable formula, the employer may run into problems.
Problems can arise when employers:
- Fail to accurately track or document employees’ tips.
- Assume employees receive enough tips to cover the difference between their cash wage and the minimum wage.
- Fail to make up the difference when employees’ combined cash wages and qualifying tips fall below the applicable minimum wage.
- Incorrectly calculate overtime compensation.
Get legal guidance
If your business pays employees through tips, talk with a lawyer or specialist who understands how minimum wage requirements apply in that context. Atom Law Group provides employment law representation and labor audit assistance.
The current federal minimum wage is $7.25 per hour. There are usually proposals to raise it. For example, there has been a proposal to raise it to $25 by 2031. For now, you’ll mostly see minimum wage claims under state laws, as state minimum wages tend to be higher than the federal minimum wage.
Sources:
A common mistake
From a business perspective, employers may think they’re complying with minimum wage requirements. But when tips or a different fee structure are involved, they may think minimum wage doesn’t apply. For example, a business may pay people by the job in a fee- based arrangement and not consider minimum wage. The most important thing is to keep good records. You may be paying more than minimum wage in that scenario, but if you can’t prove it, you could have a big problem when the DOL requests records.
Conclusion
If you’re audited, the government will look at how much money you paid over a specific period of time, not necessarily just the hourly rate shown on paper.
Contact an attorney: If you have questions about wage-and-hour compliance or a labor audit, contact Atom Law Group to discuss your situation.
