Are You Prepared for a Labor Audit?




   As seen in Golf Business September/October 2022   

By Ronnie Miles, NGCOA Director of Advocacy


No one wants the Department of Labor to knock on your door to inform you they are here to perform a labor audit of your golf course. But unfortunately, it seems this is becoming more and more frequent. It's important to note that the size of your operation does not change your chances of avoiding an audit.

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Employee complaints generally trigger audits, but you could be a random business selected by your state labor department. During one recent audit, where no complaints had been received, the auditor stated, “Golf courses had been identified as a segment to be audited.”
  

These audits can be unannounced or may be preceded with a letter. What documents will you need? Any DOL Wage and Hour Division’s audit intends to ensure the business complies with the Fair Labor Standards Act (FLSA. They will request to see employment records for at least the past two years. Some of the key areas they are reviewing include;

  • Incorrect timekeeping and recordkeeping
  • Unpaid wages
  • Ensuring all hours worked are recorded, including outside regular work hours
  • Child labor compliance
  • Family and Medical Leave Act (FMLA) compliance
  • Improper wage deductions
  • Correct classification of exempt and non-exempt employees
  • Compliance with the Employee Retirement Income Security Act (ERISA), which requires businesses to make employees aware of their rights, as well as the company’s payroll and employment records

Our larger golf operators probably have HR staff that can more easily respond to an audit than some of our smaller operators, whose owner or general manager is also the HR manager. However, audits are often triggered by an employee complaint to DOL, including those past and present employees, so larger operators may be subject to more disgruntled employees.

Are you ready for an audit? Here is a short list to create a checklist for your organization:

  • Job descriptions: Job descriptions are vitally important for so many reasons. For these purposes, job descriptions are important to have on file to ensure that workers are properly classified as employees or independent contractors and determine whether an employee is exempt from certain FLSA wage and hour requirements.  Job descriptions are one of the first things the DOL will ask to review.
  • Workplace posters: Besides job descriptions, one of the first things that the DOL will ask to see is the location in which all of your required workplace posters are posted. Make sure you have up-to-date posters, and that all the required posters are posted.
  • Timesheet and payroll records: Employers must have clear timekeeping policies and procedures and clear payroll records. It is usually best practice to have employees sign off on hourly time sheets and to maintain records of employee pay to prevent a wage and hour claim.
  • Timekeeping system for non-exempt employees: You should have a timekeeping system for non-exempt employees. Employers must know that any hours beyond regular hours worked (for non-exempt employees) must be compensated at time and one-half the non-exempt employee’s pay. You cannot ask an employee to perform any task, no matter how minor, in that employee’s off-hours unless it is compensated.
  • Calculating work hours and unpaid meal periods: You will want to be sure that you have a system in place to properly calculate an employee’s work hours, including paid rest periods and unpaid meal breaks. Rest breaks between five and 20 minutes are compensable under the Fair Labor Standards Act (FLSA), as is time spent on training, changing into work gear, and other work activities. Meal breaks of 30 minutes or more do not have to be compensated. You must properly calculate an employee’s hours to ensure that the rate of pay, and overtime pay, are appropriate.
  • Calculating regular rate of pay: You must properly calculate employees’ regular rate of pay and provide at least the minimum wage. Both the federal minimum wage remains at $7.25 per hour.
  • Overtime pay requirements: Non-exempt employees must receive one and a half times the regular rate of pay for every hour worked beyond the 40-hour workweek.
  • Tracking off-the-clock work: Employers must pay employees for any work that the employer “knows or has reason to believe is being performed.” If an employer could have known about additional hours worked through reasonable diligence, the employer must compensate the employee for those remote work hours.
  • Identifying exempt employees: Ensure that you have properly classified any workers that you identify as exempt. These employees generally must meet a salary basis test and a job duties test.
  • Classification as an employee or independent contractor: Although there has been significant activity surrounding the independent contractor test, the DOL recently withdrew new regulations related to the test, and the existing test remains (i.e., the multi-factor DOL test). 


Here are some additional resources to ensure your business is in compliance and ready for a DOL audit.

Summary of Major Labor Laws Summary of the Major Laws of the Department of Labor | U.S. Department of Labor (dol.gov)

DOL FAQs FLSA Questions and Answers About the Fair Labor Standards Act (FLSA) | U.S. Department of Labor (dol.gov)

Child Labor Fact Sheet for Exempt Recreational Businesses  U (dol.gov)

Child Labor Fact Sheet for Restaurants Employer Self-Assessment Tool for Child Labor in Restaurants | U.S. Department of Labor (dol.gov)

We strongly recommend that your attorney or legal representative review your personal management program to ensure your club is prepared for a surprise audit. For assistance locating legal help, email me at RMiles@ ngcoa.org. 

We hope you do not encounter a labor audit, but know the NGCOA Golf Business Advocacy team is here to assist you.