I have been dealing with the Department of Labor, which selected an immigrant-owned small business to audit for compliance with minimum wage and overtime laws. After the audit these unfortunate people were told that they were subject to a fine of over $100,000. The Department of Labor refused to disclose the basis of this finding but the responsible agent did give us a brief summary of the conclusions. Great pressure was then put on the owners to respond within a couple of days. This of course would give no meaningful opportunity to go over the daily time records for the 16 month period of the audit, in order to verify the Department’s conclusions.
The reason for this demand of a hasty response seems to have been that the Department of Labor’s accusations and conclusions were not supported the records of the little business. The time records, many of which the Department of Labor had not even looked at, refuted the claims against the small business. We scoured the time records to see how they might have been interpreted to support the allegations of the Department and could not imagine how it justified its claims.
I sent a letter explaining what the time records said. I couple of weeks later I got an email from the agent who made the assessment, saying she’d get back to me next week with a response. That was over two months ago. Still waiting.
At first blush it looks like the agent was trying to make her bones at the Department by abusing a vulnerable business in which the owners, because of language and culture issues, were unlikely to be able to defend themselves and might be daunted by the possibility of this the affecting their immigration status. My guess though is that the agent was relying on accusations of disgruntled former employees, putting greater reliance on that than a careful examination of the records.
Small businesses have enough difficulties in the roiling seas of commerce without being subject to this kind of abuse. The risks here are best limited by accurate and well organized record keeping and by having the employees sign a form at the time of their departure from the job that includes reference to such matters.