Nearly 80% of Companies Have Escaped DoL Pay Practices Audit

April 5, 2005 ( - One in five employers reports having been audited by the Department of Labor (DoL) for violating federal wage-and-hour laws, a new survey found.

A news release from Business and Legal Reports Inc. (BLR) said 15% of the respondents have been audited at least once while another 5% said their pay records have been reviewed between two and five times and 79% said they’ve never undergone a DoL wage-and-hour exam.

Fifty-one percent of the respondents reporting on this issue of their familiarity with the new federal and existing state pay laws claimed that they had a complete understanding of the federal regulations and their interplay with state law, 13% said they did not understand the laws well enough, and 36% claimed they had a somewhat complete understanding.

BLR also asked about companies’ schedule of auditing their own pay practices. Some 29% of respondents stated that they audit their employee classifications yearly, 6% every other year, 2% every five years, and 63% stated that they do not have a set schedule but intend to continue updating their classifications in the future.

By regularly reviewing their pay practices, employers can protect themselves from government enforcement action and employee lawsuits, said Susan Prince, managing editor of BLR. “Internal audits decrease the chances that anyone would view any errors in your past practices or policies to be willful violations of the law,” Prince asserted in the news release.

BLR’s survey showed that of those companies that had established a yearly auditing schedule, 19% had less than 50 employees, 39% had between 51 and 250 employees, 21% had between 251 and 500 employees, and 21% had more than 500 employees.

In addition, the survey asked whether employers had reviewed their company’s job descriptions to determine whether they are still accurate, reflect the jobs being performed, and reflect the skills necessary to perform the job. Forty-one percent stated that they have reviewed all of their job descriptions, 37% had reviewed some, 8% had not reviewed them and do not plan to, and 14% had not reviewed them but plan to do so in the next year.

The survey included 400 companies, of various sizes and locations throughout the US. A report on the survey results is available here (a free registration is required).