This article has been published in partnership with ThinkHR.
Question: Any recommendations on how to conduct an internal wage and hour audit?
Answer: Yes, we do! First, kudos to you and your organization for considering this practice. Some organizations don’t conduct wage and hour audits because they can be costly and time consuming. However, choosing to conduct them shows that you are being proactive and trying to protect your organization from legal and financial liability due to non-compliance with federal Fair Labor Standards Act (FLSA) and state wage and hour laws. You should conduct these audits periodically, such as at the beginning of your fiscal year, when your organization undergoes restructuring, or when there are significant changes to FLSA regulations and state wage and hour laws.
As general guidelines, when you conduct an internal wage and hour audit, consider the following:
Keep in mind the DOL can conduct a wage and hour audit at any time and is not required to provide you with notice. Additionally, many factors — internal and external — could cause your organization to suddenly be out of compliance with wage and hour laws. Incorporating periodic internal wage and hour audits into your annual business practice as a precautionary measure may help minimize risks to your organization.
Finally, while conducting an internal audit is important, be aware of other legal implications that could arise from the auditing process. If you discover federal or state wage and hour law violations during the audit, you could expose your company to a willful violation of wage and hour laws in subsequent litigation if you do not correct the issues immediately. Consulting with outside legal counsel during your audit process can help mitigate your risks in the event that your wage and hour practices are challenged.