What To Do If The Department Of Labor Knocks On Your Door
July, 2008
2007 Wage & Hour Class Action Settlements
Farmer’s Insurance - $210 million
IBM - $65 million
Albertson’s - $37 million
Merrill Lynch - $37 million
Pacific Bell - $35 million
Radio Shack - $29.9 million
Starbucks - $18 million
Introduction.
Wage and hour class actions are on the rise. In fact, such Fair Labor Standards (FLSA) lawsuits are up 120% since 2000! FLSA lawsuits now have surpassed the number of discrimination lawsuits filed per year.
Insurance companies, investment companies, corporations, and food and retail chains were among the major companies hit last year. The following are examples of some companies which entered settlements of class action wage and hour claims.
Applies To Medium And Small Companies, Too.
Question: What does this mean to a small- to mid-size company?Answer: A lot.
Lunch Break Example.
Take, for example, a company with 25 employees. If the employer deducts 30 minutes a day for each employee’s meal period and the employees later sue because they were required to work through lunch, this company easily could be looking at over $100,000 in damages and fees! This is just for one year of time.
Here’s how the DOL gets to this amount: 1/2 hr per day times 5 work days equals 2.5 hours per week. If the employee earns $15 per hour, this adds up to $1,875.00 per year. Multiply that by 25 employees, and the company is looking at $46,875.00 in back pay alone for the year. If the DOL finds a willful violation, that amount is doubled, to $93,750.00. Add to that, under the FLSA and many state statutes, attorneys’ fees, plus other potential fines, and a company could find itself in deep trouble.
Here’s Some Help.
Because of the high stakes involved, it can be very stressful when the federal or state Department of Labor (DOL) announces that it is going to be paying a visit to your company to conduct an investigation. The DOL’s “announcement” that it is conducting an investigation may come as a telephone call, a letter or literally an unannounced arrival at your company’s door.
A DOL investigation also is potentially very disruptive to your work schedule. Therefore, we provide below a checklist of “do’s” and “don’ts.”
But let us start with two important initial instructions.
- Do not sign anything.
- Contact an experienced attorney.
One Last Recommendation From Us.
Ask an experienced attorney about early settlement. Evaluate thoroughly both the legal and economic advantages and disadvantages. It could save you big fees and fines.
Conclusion.
So follow our checklist. Talk to an experienced attorney immediately. Consider settlement early. Call Jim Barber for further advice at (312) 606-7712 or e-mail at jbarber@clausen.com.
Checklists:
What to do (and not to do) if the DOL knocks at your door…
DO:
During the initial contact by the DOL investigator:
- Check the DOL investigator’s credentials.
- Get investigator’s business card.
- Treat the investigator with respect and courtesy.
Immediately after the initial contact:
- Call your attorney.
- Conduct a self-audit.
- Review job descriptions of the targeted jobs.
- Interview employees to determine accuracy of job descriptions and duties being performed.
- Ensure employee handbooks and policies accurately represent practice.
- Consult an attorney to assure policies’ comply with the law.
- Identify and correct inappropriate timekeeping and record keeping practices.
- Review/organize everything before the investigator returns review.
- Do the review/organization personally. (Too much is at stake to delegate.)
- Review every document for accuracy. Avoid surprises.
- Understand the reasons for job classifications. Be able to explain them to the investigator.
- Be aware of exposing other potential problems.
When the investigator returns to begin the investigation:
- Provide a private office, in which s/he can work. Close the door to outside distractions.
- Keep conversations private.
- Put all documents s/he has requested in the office.
- Provide one contact person to whom the investigator should direct questions. (This should be you or some other high level employee.)
After the investigation is completed:
- If the investigation is terminated, ask to get the findings in writing.
- If the investigator finds violations, through legal counsel, negotiate the fines and penalties which are imposed.
Do NOT:
- Avoid telephone calls or letters from an investigator.
- Get into casual conversation.
- Provide a statement.
- Sign or initial anything without legal counsel approval.
- Give items not requested.
- Let DOL snoop through irrelevant files/records.
- Discuss other company business in the presence of the investigator (advise other employees as well).
- Enter into a private settlement with the complaining employee – It is not binding on the employee.
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