It’s Monday morning. You’ve just settled in when your assistant tells you a representative from the Labor
Commissioner’s Office is here to speak with you. What do you do?
- Panic and run!
- The best answer is C.Chase him out of the building, shouting that he’s not welcome unless he has a warrant.
- Greet him professionally and politely request he schedule an appointment to come back at a mutually convenient time.
The California Labor Code requires employers to allow agents of the Labor Commissioner (also known as deputy labor commissioners, or deputies) to access your workplace and to provide information to them upon request (Labor Code sec. 90). Being respectful from the beginning will help the process run more smoothly and may reduce the risk of large penalties being assessed against your company.
What Is the Labor Commissioner’s Office?
The California Labor Commissioner’s Office (also known as the Division of Labor Standards Enforcement, or DLSE) is the state agency that enforces California’s wage-and-hour laws and regulations, called industrial Welfare Commission Orders (also known as Wage Orders).
The applicable laws and Wage Orders cover issues such as minimum wage, overtime pay, meal and rest periods, workers’ compensation, wage statements, child labor, and posting and recordkeeping requirements.
The DLSE uses various resources to enforce these rules, including the Bureau of Field Enforcement (also known as the BOFE), which investigates widespread violations that affect groups of workers. The DLSE also conducts other types of investigations. For example, it may contact you about individual employee wage claims or work with other government agencies to investigate workplace practices more comprehensively.
What Triggers an Investigation?
Various circumstances may cause the BOFE to pay you a visit, and you may not be told the reason. Although the BOFE does not investigate individual wage claims, a specific complaint or complaints may trigger a broader investigation. Complaints may come from a variety of sources, such as current and former employees, competitors, unions and trade associations.
Other times, the BOFE initiates investigations without receiving a specific complaint; this is common in industries with high rates of wage-and-hour violations. The BOFE targets industries that tend to employ relatively low paid and unskilled workers because they are perceived as more vulnerable workers. Industries that the BOFE scrutinizes more frequently include restaurants, garment manufacturers, security guard services, car washes, construction and agriculture.
How Will the Investigation Begin?
If your company is investigated, you may not be given any advance notice. Instead, a deputy may come to the workplace unannounced. It is appropriate to ask the deputy to provide identification and give you his/her business card.
Although the deputy will likely be prepared to begin the investigation right away, you probably won’t be. So, ask the deputy to come back at a later, agreed upon time that is more convenient for you or that will allow your lawyer to be present. If the deputy agrees to return later, use this time to review your recordkeeping and posting requirements to ensure that everything is in order.
When you meet with the deputy, you and your lawyer (if present) will have the opportunity to ask the deputy questions. Key questions include:
- What is the scope of the investigation?
- What time period is under investigation?
- Who is the lead deputy? What is his/her contact information?
- When does the deputy anticipate conducting the investigation?
- When does the deputy anticipate completing the investigation?
- Does the deputy plan to interview specific employees? Who?
It is a good idea to designate someone as the single point of contact for the deputy to work with during the investigation.
What Happens During the Investigation?
As part of the investigation, the deputy may review records, inspect the workplace, interview you or other managers, and interview current or former employees.
The deputy has the right to review your “books and records,” including timekeeping records, payroll records, job descriptions, and policy and procedure documents. You should provide only the records that the deputy actually requests. Keep track of what is provided, and provide only copies, not originals.
If the deputy conducts a worksite inspection, he or she may observe the workplace, take photographs and collect evidence. The deputy may also want to view your required postings to ensure that they are displayed properly. You may escort the deputy during the worksite inspection, and it’s recommended that you do so.
The deputy will likely interview current and possibly even former employees. The deputy may ask employees questions about their working hours, wages, meal and rest periods, and working conditions. The deputy will not ask employees about their immigration status. You should provide a private place for the deputy to interview employees. The deputy will not share employees’ responses with you or allow you to be present during the interviews of nonmanagerial employees.
Speaking with a deputy is entirely voluntary on the part of your employees. If an employee does not wish to be interviewed, the deputy cannot force the employee to participate in the interview. However, the deputy may provide the employee with his/her business card in case the employee wants to contact the deputy privately. Be careful not to threaten, intimidate or retaliate against employees who agree to speak with the deputy. It is unlawful to retaliate against employees for participating in the investigation.
You may object to the interview of any management-level employee but not nonmanagerial employees. Your legal counsel should be present for all interviews with management-level employees.
What Are an Employer’s Rights During the Investigation?
You have the right to be represented by legal counsel during the investigation process. As stated above, if a deputy arrives at the workplace without an appointment, he/she may agree to return at a later time when your lawyer can be present. If not, you can refuse to allow the deputy on-site without a search warrant. However, you risk setting up an adversarial relationship with the deputy from the beginning, so it is best to first see if the deputy will agree to return later.
You may also request that all interviews and on-site inspections take place at a reasonable time. If you know which employees will be interviewed ahead of time, you may inform them that a deputy will contact them.
What Happens if I Refuse to Cooperate?
It is usually in your best interest to be as cooperative as possible. The deputies generally are not trying to shut you down. Their job is to ensure compliance with the applicable laws. Part of the DLSE’s mission is to educate employers about how to comply with the labor laws, and deputies are often willing to work with cooperative employers to correct problems.
It is a misdemeanor, punishable by fine, to refuse to allow an agent of the Labor Commissioner access to your workplace or to provide requested records that are in your possession. Additionally, the Labor Commissioner’s Office may issue, serve and enforce any subpoenas that may be necessary to compel the production of documents.
What Happens at the End of the Investigation?
After the investigation, the deputy will reach his/her findings and present them to you. If the deputy finds certain violations, such as failure to pay wages, he/she may issue citations that require you to correct the violations, pay unpaid wages and pay civil penalties. You may be able to work cooperatively with the deputy if he/she finds any violations. If you have established a respectful relationship, the deputy may be willing to minimize penalties or even allow you to correct violations without penalty.
How do I Prevent an Investigation?
You can do several things to prevent complaints that lead to investigation or to quickly resolve investigations. First, it is a good idea to conduct an internal audit of your wage-and-hour policies and practices and regularly update your employee handbook, with the assistance of legal counsel.
The internal audit should answer questions such as:
- Are you maintaining all necessary records?
- Are you paying at least the minimum wage for all hours worked?
- Are you properly calculating and paying daily and weekly overtime?
- Do your wage statements include all required information?
- Are all employees properly classified as exempt or nonexempt?
- Are compliant policies and practices in place regarding meal and rest periods and timekeeping?
- Are you providing the minimum amount of mandatory paid sick leave to eligible employees?
- Are you taking deductions from paychecks only as legally allowed?
- Are employees who leave the company provided their final wages in a timely manner?
Next, make sure your managers and supervisors are trained on laws and practices regarding wage-and-hour issues. Finally, ensure your open door policy is effective so employees will bring complaints to you first, instead of taking complaints directly to the DLSE.
- Develop a plan to deal with an unexpected visit from the Labor Commissioner’s office. The plan should specify the person who is the deputy’s designated contact, contact information for your legal counsel, a checklist of questions to ask during the opening conference and the location of records likely to be reviewed.
- Be professional and respectful with any deputies from the Labor Commissioner’s Office.
- Involve your legal counsel at all times throughout the investigations process.
- Ask questions and take notes when you meet with the deputy.
- Know your rights, including when you can object to a deputy’s request.
- Keep track of everything the deputy does – questions asked, documents requested, photographs taken, etc. Conduct an internal audit with your legal counsel.
- Train your managers and supervisors.
- Make sure your required postings are current and properly displayed.