If you receive a letter in the mail containing that sentence, you will have been added to what will soon be a long list of hotels investigated by the Wage and Hour Division (WHD) of the U.S. Department of Labor. WHD is the federal agency responsible for enforcement of, among other laws, the minimum wage and overtime requirements.
Over the past few years, WHD has received substantial increases in funding, which have been used to hire more investigative staff. These investigators have been applying more aggressive enforcement tactics, including assessing civil money penalties and requiring the payment of liquidated—double—damages in order to remedy violations. The WHD’s investigations are also likely to result in corporate-wide compliance efforts; in other words, if WHD finds a violation in one location, it will seek to expand that investigation to cover other locations of the same company.
These additional investigators, corporate-wide investigations, and aggressive tactics will be utilized specifically in the hotel industry. Just this past spring, WHD announced that it would be conducting hotel industry-specific investigative initiatives in various parts of the country. The focus on hotels is part of WHD’s broader effort to target those industries that employ large numbers of hourly workers in lower-wage occupations.
As a result, your company may receive a scheduling letter from WHD for an investigation. Or, a WHD investigator may just show up unannounced at your worksite. Although the urge might be to react frantically at the news of your selection for investigation, take a step back and consider your response when you get that letter (or that knock at the door). The decisions you make in the initial phases of the investigation can have far-reaching consequences as the investigation progresses.
It is important to determine the scope of the investigation. Sometimes, an investigator will be interested only in a very narrow issue. Discussing or providing information that may reveal other potential compliance problems can be highly damaging—particularly now that there is a focus on enterprise-wide compliance by WHD. You do not want an investigation involving a single exempt position classification at a remote location to morph into a corporate-wide payroll practices compliance action. In some cases, the investigator may tell you the scope, but other times the investigator may not. If you cannot determine the scope of the investigation, be particularly cautious in providing any information other than what is specifically requested.
The investigator will often review your records and ask for copies of particular documents. Be sure that you understand the documents you are providing and explain them to the investigator. Providing the investigator with a firm understanding of what the documents say helps guard against erroneous interpretations that could prolong the investigation.
Gathering and understanding the relevant records may take some time, so if you will not be ready by the date set forth in the scheduling letter, or if the investigator shows up unannounced, seek to postpone the initial meeting. WHD is permitted by law to inspect your records, but they must be reasonable about it and are often flexible in scheduling.
Be sure to keep a record of all documents you provide the investigator. Not surprisingly, government agencies lose documents and you want to be able to establish that you provided the requested documentation if and when the agency alleges that you failed to provide critical information. Thus, the best practice is to control the information received by WHD and to maintain a record of all documents provided.
To assist in your efforts to control information, ensure that your managers are aware of corporate policies regarding information distribution. If any individual manager is contacted by WHD who has not been selected as the company’s contact, the manager should explain to WHD that they do not have the authority to provide any information or documentation, but that the request for information will be forwarded to the appropriate company official who will respond to the agency.
As the investigation progresses, maintain communication with the investigator. It is better to know of the potential violations as the investigation moves along, rather than wait until the conclusion of the investigation. Throughout the process, remain professional. Provide private working space for the investigator to conduct interviews and/or review documents. In addition to inspecting records, WHD is also permitted by law to interview your employees regarding their pay and working conditions.
At the conclusion of the investigation, take notes of the investigator’s findings. You are not likely to receive a written explanation of your violations. Instead, employers typically receive a document summarizing the back wages due to employees as a result of any violations. You should review the document in detail and consult with counsel before you sign it.
In fact, it is a good practice to discuss the investigation with counsel at the first possible opportunity. In a perfect scenario, you would discuss the investigation with counsel prior to the investigator showing up at your worksite. Experienced counsel may have a sense of what the agency has been looking at in other similar investigations and can guide you through the process.
Alex Passantino and Leon Sequeira are with the law firm Seyfarth Shaw LLP. Passantino is the former head of the Wage and Hour Division and Sequeira is the former assistant secretary of labor for policy at the firm.
