When the DOL Shows Up Unannounced

It’s an unusually busy Monday morning. You have the normal catch-up on the weekend business, but your manufacturer representative is visiting today and your sales manager wants to quit. Just when you think you have everything under control, the receptionist buzzes you that someone from the federal government is there to see you. 

You go to the showroom to meet Investigator W.H. Doe from the Wage and Hour Division of the Department of Labor (“DOL”). He has spent the last 20 minutes having a “friendly conversation” with your salespeople, and he informs you that he is there to conduct an investigation. He requests that you accommodate him with a private room on the premises where he can review the laundry-list of documents he wants, and conduct interviews of your staff…. Today! Your day just got much worse.  

Wage and Hour Division investigations are launched for various reasons such as an employee complaint or a strategic decision within the DOL to look at businesses in your industry or businesses in your city. No matter the reason behind conducting the investigation, the DOL can show up unannounced at any time.  You probably have some questions about what to do if that happens. 

Does the investigator have a right to be on the premises unannounced and to conduct an investigation without a warrant or probable cause?   Your dealership is subject to The Fair Labor Standards Act (FLSA), which is the federal law that requires payment of minimum wage and premium overtime, maintenance of certain basic payroll and employment records, and limitations on working hours and types of jobs for certain underage youth. Under Section 11(a) of the FLSA, representatives from the Wage and Hour Division of the DOL are authorized to investigate and to gather data concerning wages, hours, and other employment practices, enter and inspect an employer’s premises and records, and question employees to determine whether the employer has violated any provision of the FLSA.   Congress has empowered the Secretary of the Department of Labor (aka Wage and Hour Administrator) to issue administrative subpoenas, to investigate any industry subject to the FLSA, and to look into any matter that he or she deems necessary or appropriate to determine whether any person has violated FLSA or which may aid in enforcement of FLSA. Administrative subpoenas can be issued, however the employer may question the  reasonableness of a subpoena before suffering any penalties for refusing to comply with it by raising objections in a legal action in a federal District Court.

Isn’t an investigator’s presence, unannounced and without warning or prior notification, an ambush and illegal under the law? No. Although, generally the DOL does notify an employer prior to initiating an investigation, it is not required. The DOL has the latitude to initiate unannounced investigations, which often provides the investigator the opportunity to observe normal business operations and to gather factual information quickly. Prior notification that an investigation will be initiated typically occurs by letter, which will state the date and time scheduled for the investigation, as well as list the documents, records, and other information the investigator intends to review at the scheduled investigation.  

If an investigator shows up unannounced on the premises to commence an investigation, can I refuse his or her entry to the premises?    Yes. However, you should remember that the person seeking to enter your premises will also be the person conducting the investigation and determining if your company has committed any FLSA violations. The best approach is not to kick the investigator off your property and threaten that if he or she shows up again without a warrant you will call the police. For most unannounced investigations, the investigators will work with you to reschedule the investigation at a mutually convenient date and time to allow you to gather the requested documentation and information for the investigator’s review. However, there are investigators who will insist on commencing the investigation immediately, which is legally allowed. You may refuse to permit the investigator’s entry on the premises to conduct the investigation. With that being said, the DOL has the power to subpoena and will have no hesitation to use that power to gain access to the premises to enforce its right to conduct an investigation. This does not suggest that you should roll over and take it. Cooperation is key. Request a mutually beneficial date and time to reschedule the investigation in order to gather the information requested.

The investigator will not tell me the reason the investigation is being conducted. By law, don’t I have the right to know? Typically, the DOL does not disclose the reason for an investigation. In general, investigations are conducted for a variety of reasons, all of which pertain to the enforcement and compliance with the laws that DOL is responsible for administering and enforcing, such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA). However, a majority of investigations are launched because a complaint has been filed with the DOL.   Complaints are confidential, so the DOL will not disclose whether a complaint exists, the name of the complainant-employee, or the nature of the complaint.

Should I notify my attorney? Yes. If a DOL investigator shows up, you should be concerned about potential liability. Getting your attorney involved from the onset will allow your attorney to review the documents you will produce to the investigator to ensure compliance and/or provide an analysis of possible problems that may expose your company to a penalty. Likewise, you may want to have your attorney negotiate about what you may view as an overly broad document request, and even challenge the reasonableness of a DOL subpoena by a lawsuit in a federal District Court.  Consulting your attorney early on in the investigation will help manage the investigation and can lead to early negotiations if there are issues that may expose your company to large penalties.

While unusual, investigators can show-up unannounced at any time. Cooperation is key to preserving your rights. That doesn’t mean throwing open your files and making all employees available immediately. It means that you politely ask to reschedule the investigation to a mutually convenient time that allows you to gather the proper documents and notify counsel to assist you through the investigation.   And if that doesn’t work, you politely ask the investigator to leave and return at a mutually convenient time once you have the opportunity to consult with counsel.