DOL Audits Part Two - How To Handle A WHA Audit
Assuming that you have done a self-audit on your company and taken appropriate corrective actions, you are empowered. You have knowledge of the company's weaknesses and strengths in the realm of wage-hour compliance. Do you just sit on that knowledge? No. A proactive approach would take this knowledge and communicate it to the wage-hour investigator so that the parties are on the "same page." Communication, whether it's with your spouse, child, political representative or wage-hour investigator, is the grease on the wheel of life. Does this mean a company should communicate every piece of information it knows about its wage-hour compliance at or before an initial meeting? Not necessarily. The timing and flow of the communication to the wage hour investigator is important too. The process of a WHA Audit occurs in three stages, of which there are many sub-stages. They are:
The Initial Meeting
As soon as an audit letter is received, contact should be made with the WHA investigator to create a mutually convenient time to schedule the initial meeting. As suggested above, the meeting should be set at a time that allows the company to prepare adequate answers to the audit letter and to prepare records for DOL inspection. If a self-audit has not been performed recently, it suggested that a "quick and dirty" one be conducted to assess the company's weaknesses and strengths. The meeting should not, however, be put off so far as to frustrate the WHA investigator's need to inspect the current condition of the company. A range of between one week and three weeks may be reasonable depending on the size of the company and the extent of the audit.
During this first contact it is suggested that a protocol for communication be implemented. If the company is being represented by outside immigration counsel, it is recommended that all communication and documentation be channeled through counsel. This allows the company and counsel to keep a check on the flow of documentation and information that goes to the WHA investigator. Using one spokesperson and one conduit of information will militate against duplicated requests for information. It also allows the company to maintain an accurate and ongoing working file for the audit.
The initial meeting is usually tense. It consists of the WHA investigator taking oral testimony from the company's audit team, or team spokesperson, in response to the audit letter. The WHA investigator usually prepares a written statement to be signed by the company, to document responses. A dramatic moment usually occurs when the investigator asks the company to sign the written statement after testimony. A company may, on the advice of counsel, choose to sign a statement with the caveat, "to the best of my knowledge the answers are true and accurate." Or it may choose not to sign any written statement but to orally maintain the veracity of the statement. The signing of the statement creates a possible piece of evidence against the company in the event that material misrepresentations have been made. On the other hand, the signing of the statement may set a positive tone and tenor to the investigation. Additionally, some investigators make the decision to sign the initial statement a prerequisite to the company having a copy of the initial statement. A proactive approach to the audit usually favors the signing of the initial statement as long as it accompanied by a "to the best of our knowledge" prefix.
The WHA investigator must gather necessary information to conduct a complete and thorough audit. This includes the inspection of evidence such as labor condition public access files, payroll and benefits records, immigration files and other evidence pertinent to the investigation. Once this information has been provided to the WHA investigator, the onus is on him or her to transcribe information relevant to the case. To the extent that information can be provided to the investigator in an organized and coherent fashion, the investigator's job is facilitated and expedited. For example, a company can choose to provide payroll and similarly situated U.S. worker information in the form of computer records or spreadsheets. This will allow the investigator to easily manipulate and peruse the data without taking extensive periods of time. Providing information in an ordered fashion is one way of taking a proactive approach to the investigation.
A WHA investigator usually conducts interviews of both H-1B workers as well as U.S. workers during the course of the investigation. It is natural for most employees to be scared of an investigator; hence many employees will attempt to avoid the interviews altogether. A proactive approach requires the educating of company employees about the general purpose of the audit and the reason interviews are conducted. The company should also arrange interviews for the investigator so that the process can be completed in a manner that is least disruptive to business operations. The company must keep in mind, however, that an employee should not be "coached" on what to say to an investigator. While the WHA investigator will prefer that interviews with employees be conducted in private, it is normal for counsel to be present in the interviews of managers or executives of the company.
Being proactive during the course of the investigation creates a cooperative synergy between company and investigator and keeps the "big mo" rolling. Retaining that momentum into the final meeting should be the goal for any proactive company.
Report Card--The Final Meeting
During the course of the investigation the company along with the investigator may uncover areas of non-compliance. Self-remediation with the guidance of the WHA investigator is the proactive approach. If the company's compliance is improved during the course of the audit, a WHA investigator is less likely, in the final meeting, to assess high civil money penalties and may only order those remedies that will make employees whole.
The final meeting is the last chance for the company to show interest in wage-hour compliance. The company is usually given a chance to assess its past performance in abiding by wage-hour regulations. The company, if it has had weaknesses, should acknowledge them, and accept reasonable penalties. A company should proactively seek out the advice of the WHA investigator as to how it can maintain wage-hour compliance moving into the future. WHA investigators may provide practical guidance as to how to comply with changing enforcement priorities of the DOL. The investigators may also provide valuable insight as to what rules, policies and procedures may be changing in the near future.
The final meeting ends with a written assessment of the company's compliance with WHA regulations. The company is often given a chance to explain or dispute areas of non-compliance at this time. If the company's arguments have merit, the WHA investigator may choose not to assess formal remedies. Being ready to present the company's sophisticated legal argument in a non-confrontational manner is part of being proactive. In areas where the company's non-compliance is indisputable, being contrite and promising immediate self-remedies is the proactive approach to avoiding a formal order. Whatever the result, having the company seize the initiative in demonstrating its commitment to wage-hour compliance is the recommended strategy.
In our "real-time" world, a company must multitask certain action-items to be proactively prepared for a DOL WHA audit. A results-driven campaign for a successful audit includes careful maintenance of LCA public access files and the conducting of periodic self-audits followed by efforts at self-remediation. When faced with an actual audit, the company should work proactively work with the WHA investigator to help complete the investigation and at the same time bring the company into complete wage hour compliance. At the end of the day, if you prepare well for an audit, and then manage the expectations of the WHA investigator, your audit will ....."BINGO"... be over before you know it.
A company should note, however, that pursuant to 20 C.F.R. §655.760, public access files must be made available to the public, including the WHA investigator, within one working day from the date of filing the labor condition application.
20 C.F.R .§655.805.
Excel, Lotus and Quattro pro are examples of spreadsheets that can provide information to the WHA investigator in an easy to use format.
Corporate speak for "momentum."
Under 20 C.F.R. §655.810(b).
Under 20 C.F.R. §655.810(a).
Pursuant to the requirements of 20 C.F.R. §655.815.
Alan Tafapolsky is a Partner in the San Francisco and Los Angeles based business immigration law firm of Tafapolsky & Smith LLP. He wishes to thank Terry Kelly, a true "team player," for editing this article.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.