An auditor may come knocking at your door if you have errors in your payroll that result in a violation of the Fair Labor Standards Act (FLSA). It is estimated that more than one-half of all employer groups have misclassified their employees under the FLSA, though many do not realize it.
Generally, the Department of Labor will initiate an audit after a current or former employee files a complaint or during a routine investigation. Much like an audit for a potential ERISA violation, the DOL will visit your organization to conduct interviews, examine time clocks and ensure that all employment notifications are available to your employees. The auditor will also review up to three years of wage and hour records to determine if there are any violations in your payroll practices.
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