Beimdiek Blog

Are You Prepared for a DOL Audit?

No one looks forward to an audit; however, with advance preparation and careful record keeping, a U.S. Department of Labor (DOL) audit will be less stressful for all involved. An audit may be triggered by employee complaints, incomplete or inconsistent information, or for no apparent reason at all.

What Types of Audits Does the DOL Conduct?
A DOL audit typically falls into one of four categories. A compliance audit ensures that a company is in compliance with applicable federal, state, and local laws and regulations. A best practices audit compares a company's HR practices to a previously identified company with outstanding HR practices to assist in improvement. A strategic audit examines the processes within the company and compares them to the company's strategic plan. Lastly, a function-specific audit examines a specific area of the HR department.

What Happens During a DOL Audit?
If your company is selected for an audit, do not panic. Understanding the audit process will help you face it calmly and rationally. An audit may investigate HR practices or employee benefits. The steps of an audit are as follows:

  • You will receive an initial letter that provides information about the investigation and requests documents. The DOL may require broad documentation including employee benefit plan information, insurance policies, organizational charts, HR policies, and documents, or just a few pages of relevant documents to ensure the company is in compliance with federal, state, and local laws.
  • You should respond immediately to any request. You can inquire about the scope of the investigation and if necessary, request additional time for compliance.
  • The DOL will begin to collect data, often through a questionnaire and interviews, using the information gained to create benchmarks and provide valuable feedback to management.
  • The HR department and management teams will be expected to turn the audit's findings into an action plan to implement best practices, improve efficiency, and become compliant with regulations.

How Can You Prepare for an Audit?
An audit can happen at any time and with little notice. You can be prepared at all times by making certain that your company is compliant with applicable HR laws, maintaining complete and organized employee files with complete data, and ensuring that all independent contractors are properly classified. Auditors will look for common violations particularly in regards to employee breaks and benefits, overtime pay, and child labor. By keeping abreast of the latest laws and regulations, you can ensure that your company is always audit-ready.

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