Employers are Effectively Powerless to Prevent State or Federal Authorities from Accessing Employee Work Schedules, Pay Histories and other Records, and Unprepared Companies are Vulnerable to Hefty Back Pay Orders and Penalties
By Jack K. Merrill, Esq.
It could be triggered in a variety of ways. A disgruntled employee complains. The government is concerned with industry practices. A stray remark reaches the wrong ears. However a wage and hour audit starts, it forces employers to open their books and exposes them to potentially large back pay orders and fines.
Audits aimed at enforcing a plethora of wage and hour rules are common. They pose huge risks for unprepared employers, who may be hit with damage orders in the tens of thousands or higher. Defending against damage orders requested made by state and federal investigators is difficult and, in many cases, simply not practical. The best defense against an audit, then, is compliance with all wage laws.
Auditors cannot, after all, find fault with employers who properly pay their workers and maintain their records. Ensuring that wage laws are followed can thus immunize a business from audit risks. Doing so should be part of every company’s regular business practices.
To illustrate this point, a review of governmental authority and a look at the experiences of others are helpful. Here’s an overview of how audits work and where they may lead. [Read more...]