Federal Agencies have become more aggressive in pursuing claims of wrong-doing by employers.  The Department of Labor (DOL), in particular, has ramped up it’s Audit and Claims Investigations substantially within the last couple of years.

This can be troublesome for small businesses in several ways.  Businesses can easily spend 40-60 hours responding to a claim investigation, even when there is no violation found and even when there is no jurisdiction established.  Establishing agency jurisdiction is becoming secondary to whether or not a violation occurred.

This shift in focus raises the stakes on business because agencies now share information.  Now the information collected by one agency can be shared and used to create claims with multiple agencies.  For example, a state audit could easily turn into IRS and DOL investigations, if employees are being paid as contractors.

Although information can be shared between agencies, each agency will still conduct their own investigations and pursue their own recourse for penalties, fees, back-pay, taxes etc.  For example, a small business could be looking at paying penalties to the state, the IRS and the DOL for the same violation.

Small employers can take a few simple actions avoid getting stuck in an agency crunch.

• Adopt and follow smart policies and practices.  Do not over commit yourself by creating unnecessary policies that you cannot reasonable follow fairly and consistently.
• When responding to an audit or investigation, keep your answers simple.  Do not volunteer a wealth of information that you think might be helpful or  relevant.  The agency knows what is relevant and will ask for it, if needed.
• Review your Employee Handbook and Company Policies, at least once a year.  Policies that work to your advantage this year, could easily work against you next year.
• Partner with a trusted HR Consultant or Employment Law Attorney.  It is extremely challenging to stay on top of all the legal minutia… and still effectively manage your day-to-day business.  Let the experts scan the legal environment for you and guide you through steps to avoid agency scrutiny in the first place.