Department of Labor Audit Checklist: Wage & Hour Audit

Employers in Texas are required to comply with federal wage and hour laws, among other laws and regulations, enforced by the U.S. Department of Labor (DOL). Audits conducted by the Department of Labor can focus on a variety of employment law issues such as wage and hour rules, workplace safety, and family and medical leave requirements. As an employer, you should know that the DOL can initiate an audit at any time. Accordingly, it is important to be prepared for a DOL wage and hour audit. The following are issues that you should consider as you put together a DOL wage and hour audit checklist.

Creating Your Checklist

Your DOL wage and hour audit checklist should include the following issues and considerations:

  • Job descriptions: Job descriptions are vitally important for so many reasons. For these purposes, job descriptions are important to have on file to ensure that workers are properly classified as employees or independent contractors, and for determining whether an employee is exempt from certain FLSA wage and hour requirements.  Job descriptions are one of the first things the DOL will ask to review.
  • Workplace posters: Besides job descriptions, one of the first things that the DOL will ask to see is the location in which all of your required workplace posters are posted. Make sure that you have up to date posters and all the required posters are posted.
  • Timesheet and payroll records: Employers in Texas must have clear timekeeping policies and procedures in place, along with clear payroll records. It is usually best practice to have employees sign off on hourly time sheets and to maintain records of employee pay to prevent a wage and hour claim.
  • Timekeeping system for non-exempt employees: You should have a timekeeping system in place for non-exempt employees. It is critical for employers to know that any hours beyond regular hours worked (for non-exempt employees) must be compensated at time and one-half the non-exempt employee’s pay. You cannot ask an employee to perform any task, no matter how minor, in that employee’s off-hours unless it is compensated.
  • Calculating work hours and unpaid meal periods: You will want to be sure that you have a system in place to properly calculate an employee’s work hours, including paid rest periods and unpaid meal breaks. Rest breaks between five and 20 minutes are compensable under the Fair Labor Standards Act (FLSA), as is time spent on training, changing into work gear, and other work activities. Meal breaks of 30 minutes or more do not have to be compensated. You must properly calculate an employee’s hours to ensure that the rate of pay, and overtime pay, are appropriate.
  • Calculating regular rate of pay: You must properly calculate employees’ regular rate of pay and provide at least the minimum wage. Both the federal and Texas minimum wage remain at $7.25 per hour.
  • Overtime pay requirements: Non-exempt employees must receive one and a half times the regular rate of pay for every hour worked beyond the 40-hour workweek.
  • Tracking off-the-clock work: In the COVID-19 pandemic, the DOL issued new guidance concerning employers’ obligations to keep track of remote employee hours. Employers are required to pay employees for any work that the employer “knows or has reason to believe is being performed.” If an employer could have known about additional hours worked through reasonable diligence, the employer is required to compensate the employee for those remote work hours.
  • Identifying exempt employees: Ensure that you have properly classified any workers that you identify as exempt. These employees generally must meet a salary basis test and a job duties test.
  • Exceptions to exempt employee pay: Exempt employees can only receive less than a full salary if there is an exception, which may include a full day or more absence, deductions for military or jury duty, safety rule infractions, disciplinary suspensions, workplace misconduct, or unpaid leave under the Family and Medical Leave Act (FMLA).
  • Classification as employee or independent contractor: Although there has been significant activity surrounding the independent contractor test, the DOL recently withdrew new regulations related to the test and the existing test still remains (i.e., the multi-factor DOL test). You should make these determinations carefully after a full examination of all the surrounding circumstances.

Contact a Dallas Employment Law Attorney

Whether your company is adjusting to new remote workplace norms or work-from-home policies, or you simply want to be prepared for a DOL audit, our Dallas employment law attorneys can help. Contact Simon Paschal PLLC today.

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