When the United States Department of Labor (“DOL”) requests documents during a Fair Labor Standards Act (“FLSA”) investigation, compliance is not optional. Indeed, if an employer drags its feet long enough, and repeatedly demonstrates a refusal to cooperate, the penalty for doing so could be time behind bars.
That’s what happened to Rosie Guthrie, the owner of a limited-liability company that provides in-home care services in Michigan. When the DOL’s Wage and Hour Division opened an investigation into her company’s practices, an investigator contacted Guthrie by phone to make an informal request for records. The investigator was looking for routine documents like worker contact information, payroll records, and timesheets.
Guthrie said the investigation was probably a scam and refused to engage.
The investigator followed-up several more times via email, phone, and letter, giving Guthrie extra time to come to her senses. She did not.
When Guthrie finally agreed to meet with the investigator, she was only willing to give her a handful of sample documents, including some timesheets with employees’ names scratched out. She refused to let the investigator look at anything else.
Guthrie promised to provide more documents in a few days. Five days later, she had not. When pressed, Guthrie responded that the samples she provided were sufficient, and if the Secretary of Labor wanted to “take it to court,” so be it.
Turns out, the Secretary of Labor did want to take it to court.
The Regional Administrator for the DOL served a subpoena. In all caps, the language warned Guthrie, FAIL NOT AT YOUR PERIL. She ignored it.
The Secretary of Labor filed a petition to enforce the subpoena, which the federal court granted, ordering Guthrie to produce the documents within 15 days. She ignored that too.
The Secretary of Labor followed up with a motion for contempt, which the federal court granted, again ordering Guthrie to produce the documents, this time within five days of the order. The judge tacked on attorney’s fees and a $250 per day fine for non-compliance after the five days. Guthrie ignored that too.
The Secretary of Labor did not take Guthrie’s obstinance lightly. They instead made a request for incarceration. And that’s just what the judge ordered, issuing a bench warrant for Guthrie’s arrest.
After an in-person hearing before the judge, Guthrie was released on orders to provide investigators with “unfettered access” to all documents on the company’s premises, including records stored on computers, making clear that the agents are free to seize any responsive documents or data they find.
Guthrie clearly underestimated the power and perseverance of the Department of Labor, to say nothing of the court.
She is not alone. Earlier this year, the National Labor Relations Board ("NLRB") pursued motions for contempt when a Wisconsin salon failed to reinstate an employee in accordance with an NLRB order. The federal judge in that case imposed over $30,000 in fines and ordered the arrest of two of its corporate officials, who were taken into custody and, like Guthrie, forced to comply.
Experienced employment counsel can help you avoid investigations altogether. However, investigation or not, employers have mandatory obligations to keep certain records under applicable wage-and-hour laws, and the DOL has the right, by law, to look at those records. If the DOL, the NLRB, or any other state or federal agency does come knocking, it is imperative to have sound counsel to help you mitigate risks without incurring such drastic, negative consequences.
