Written by Fanny A. Ferdman, Justin A. Guilfoyle and Delores Chichi from BakerHostetler on April 2, 2024
President Joe Biden has signed off on the most recent government funding bill, which allocates $13.4 billion to the United States Department of Labor (DOL), including $260 million earmarked for the DOL’s Wage and Hour Division. This indicates that while there is a divided Congress, we can still expect a continued increase in the DOL’s already robust Wage and Hour Division’s investigatory team.
Over the past couple of years, employers across all industries – especially hospitality, retail, manufacturing and healthcare – have been experiencing a significant increase in DOL wage-and-hour investigations. The DOL has confirmed that it targets low-wage industries and businesses in specific geographic areas when selecting employers to investigate. And while a DOL investigation remains a looming threat to employers across the country, New York-based employers should be particularly aware of the possibility of increased state agency action following the recent recommendation from New York State Comptroller Thomas DiNapoli that the NYS DOL must do even more to address labor violations in New York City.
These agency investigations are being commenced as a result of both employee complaints received by the DOL and random selection pursuant to the DOL’s inherent authority to enforce federal wage-and-hour law. And not only have the number and scope of federal investigations grown, but there has been a similar increase of individual states’ departments of labor investigations across the country.
DOL investigations can be burdensome for companies with respect to both their time and their resources, and they also carry the risk of significant financial implications for noncompliant employers. Wage-and-hour violations uncovered as part of a DOL investigation have the potential to carry significant financial repercussions, including awards of back pay, liquidated damages, interest and monetary penalties.
The nationwide increase in wage-and-hour investigations by both the DOL and its state counterparts makes clear that now is the time to get ahead of a DOL investigation by conducting internal, fulsome wage-and-hour audits with the assistance of counsel to ensure federal and state compliance in order to mitigate the risk of potential civil penalties. This is particularly important for multistate employers that are covered by numerous state labor laws that may contain unique requirements in those states. The goal would be to review the DOL’s favorite areas of trouble and ferret out and correct any issues, create a paper trail that memorializes your practices and good-faith efforts to comply, and provide guidance to navigate an agency investigation should the DOL come knocking.
