Audit Anxiety? How to Survive a DOL Wage & Hour Investigation Without Breaking a Sweat"

The U.S. Department of Labor (USDOL) and the New York State Department of Labor (NYSDOL) both enforce wage and hour laws, but their focus and jurisdiction differ. The USDOL enforces federal labor laws, including the Fair Labor Standards Act (FLSA), which governs minimum wage, overtime pay, recordkeeping, and child labor protections at the national level. However, New York State has stricter wage and hour laws than federal law, meaning that NYSDOL actively enforces additional requirements that go beyond USDOL standards.

📌 Key Takeaway: Even if federal enforcement priorities shift, New York will continue aggressively enforcing state wage laws. Employers must comply with both federal and state requirements, whichever is more protective of workers.

When the DOL shows up for an audit, your goal should be to get them in and out as quickly as possible while ensuring full compliance. Delays, missing records, and disorganization can lead to more in-depth investigations, larger penalties, and extended scrutiny.

✅ Be Prepared in Advance – Have all required records organized and ready (see the list below). If everything is in order, the audit is likely to end faster.
✅ Provide Requested Documents Promptly – Auditors will request specific payroll and time records. Handing them over immediately reduces suspicion and speeds up the process.
✅ Allow Investigators to Speak with Employees – You cannot discipline or retaliate against employees for cooperating with a DOL investigation.
✅ Avoid Unnecessary Discussions – Stick to the facts and only answer what is asked. The more you talk, the more questions the auditor may have.
✅ Remain Professional and Cooperative – Treat investigators with courtesy and show that your business takes compliance seriously.

📌 Practice Tip: The best way to ensure a smooth audit is to have all payroll records ready before an investigator ever arrives. The longer it takes you to provide documents, the more likely they will dig deeper into your records.

DOL audits can be triggered by various factors, including:

✅ Employee Complaints – A worker files a wage theft complaint about unpaid overtime, misclassification, or withheld wages.
✅ Industry-Wide Investigations – The DOL targets specific industries (e.g., hospitality, construction, healthcare) known for compliance issues.
✅ Random Audits – Some businesses are randomly selected for review.
✅ Referral from Another Agency – The IRS, state labor department, or unemployment office may flag a business for audit.
✅ Independent Contractor Misclassification – Businesses that classify workers as independent contractors rather than employees often face scrutiny.

📌 Practice Tip: Employers should conduct internal wage audits annually to identify potential violations before the DOL does.

The DOL typically requests records covering two to three years of payroll and wage data, including:

✅ Employee pay rates, job titles, and hire dates
✅ Timekeeping records showing hours worked per day and week
✅ Payroll records (including overtime pay calculations)
✅ Wage notices (WTPA forms) signed by employees
✅ Pay stubs detailing deductions, tips, and allowances
✅ Independent contractor agreements and 1099s
✅ Bonus, commission, and incentive pay documentation
✅ Records of meal and rest breaks for applicable employees
✅ Employee classification policies (exempt vs. non-exempt workers)

📌 Practice Tip: Employers must ensure all payroll records are stored and easily accessible for at least six years, as required under NY labor law. There is no excuse for not maintaining proper backups—this is 2025. Paper records should be scanned and saved digitally, and archives must be downloaded from payroll providers and timekeeping systems before changing services. If records are missing, employers face serious risks in a DOL audit.

Without records, investigators will rely on employee statements and assume their accounts are accurate. This means if an employee claims they worked unpaid overtime or were not properly compensated, and the employer cannot produce clear documentation, the DOL will typically side with the employee.

📌 Bottom Line: If you do not have proper records, the burden of proof shifts to you, and you could be held liable for significant back pay, penalties, and damages. Keep everything organized, backed up, and readily available before an audit ever happens.

At Jacobs & Associates, we believe that DOL audits don’t have to be a nightmare if you’re prepared. Employers who properly track payroll, classify workers correctly, and stay compliant can avoid penalties and keep their business running smoothly.

By implementing clear policies, payroll training, and compliance audits, businesses can prevent wage theft lawsuits and avoid financial liabilities.

If you need guidance on DOL audits, payroll compliance, or defense against wage claims, reach out for expert legal support.

Keep Fighting the Good Fight.