Dealing with Labor Investigations and Misclassification of Staff

Posted by Charles Middleton on 10/20/2015

Q: What Labor Department investigations concerning wage and hour issues should employers watch for?

A: The Wage and Hour Division of the U.S. Department of Labor is increasing the number of investigations that it is conducting. Certain industries are being targeted in addition to the investigations that result from an employee complaint. The oil field is one such industry. In June, I testified on behalf of the U.S. Chamber of Commerce in front of the U.S. House Workforce Protection Subcommittee concerning questionable tactics being used by investigators.


Q: What kinds of tactics by investigators should be of concern to employers?

A: I discussed several such tactics in my testimony. First, some investigators are urging employers not to consult their attorney when the employer has a right to have such advice. Second, if the investigator finds a potential violation, then the investigator holds a “closing conference” with the employer and presents a potential settlement. Recently, investigators have insisted that the company representative immediately accept the settlement without allowing time for consultation with legal counsel or higher corporate management. Third, the investigator presents the settlement as being contingent upon approval of the investigator's supervisor. After the employer agrees to the settlement, then the supervisor changes the terms to include liquidated (double) damages.


Q: How are employee “misclassifications” involved?

A: This occurs in at least two ways. First, the employer may have misclassified an employee as being “exempt” and not entitled to overtime. Second, an employer may have unsuccessfully attempted to hire an individual as an independent contractor rather than an employee. The latter is a specific area of emphasis at this time.


Q: What steps should an employer take to protect itself?

A: First, employers should periodically review whether or not exempt employees meet the current salary and duties tests. With the recent proposed changes in the regulations governing these exemptions, this step is critical. Second, the employer must keep accurate time records. Third, if the employer is unsure of any of these wage and hour issues, then they should consult with their legal counsel rather than guess at the answer.


Published The Oklahoman, October 20, 2015