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What To Do When a Government Inspector Knocks On Your Door: How to Prevent and Fight Unjust Enforcement Actions Presented By Karen R. Harned, Esq. Executive Director NFIB Small Business Legal Center
Some provisions of the EEOC like the Equal Pay Act apply to businesses employing one or more employees while other provisions such as the Age Discrimination in Employment Act apply only to businesses employing twenty or more employees.
It Can Happen to Anyone Remember: EPA regulations apply to all businesses
ICE has unleashed a new enforcement strategy targeting those who employ illegal aliens, complete with undercover agents and federal prosecutions.
EPA has increased enforcement of federal pollution laws, launching an online map that shows the locations of federal air and water enforcement actions in locations such as the Chesapeake Bay watershed.
The Secretary of Labor recently stated “We will not rest until the act (FLSA) is followed by every employer, and each worker is treated and compensated fairly.” The Department of Labor has increased the staff of its wage and hour division by 1/3.
Why Worry About Enforcement Actions Now?
EEOC officials predict that EEOC charges may reach about 102,000 in 2010, a record high. Additionally, the EEOC plans to hire 300 additional employees in 2010.
According to the figures released for 2010, OSHA conducted more than 41,000 inspections in 2010 - a 15-year high and a five percent increase over 2009. In addition, OSHA issued more than 94,000 citations in 2010, a seven percent increase over last year.
Why Worry About Enforcement Actions Now?
ICE has announced a new initiative to increase audits of employment records. ICE issued 652 Notices of Inspection (NOIs) for July 2009, alone. That’s more than the total amount of NOIs issued in all of 2008.
Background: Why Small Businesses Should Be Concerned
Enforcement actions can have negative impacts on the ability of small business owners to own, operate, and grow their businesses.
The penalties resulting from enforcement actions range from small penalties to jail time.
Even when an inspection does not result in a citation or fine, inspections disrupt employees, decrease worker productivity, and can create a stressful workplace.
Statutes, regulations and permits usually specify the length of time records are required to be kept and may, like Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Resource Conservation and Recovery Act (RCRA) specify that notice is to be given to EPA before any document destruction.
Examples of documents the EPA might ask to see during an inspection include:
- Lead based paint inspection reports.
- History, repair, and upgrade records to certain system such as underground storage tanks.
- Insurance documentation: For certain facilities such as facilities with underground storage tanks, a “Certificate of Insurance” or “Endorsement” with associated paperwork listing the inspected facility as being covered under the policy is required.
The Department of Labor (DOL) will typically provide the employer with the chance to review its records and report back to DOL. If the employer refuses to review their records or DOL is not satisfied that the employer conducted an objective review, DOL will conduct its own inspection.
An employer’s objective review of records can prevent an inspection entirely.
Some EPA statutes require written notice along with a statement as to the reasons for the inspection before EPA may enter a facility or review records. Other EPA statutes allow the EPA to enter without notice.
By contrast, OSHA is permitted to inspect just about every part of the workplace with no notice.
ICE provides three days notice prior to their review of I-9 forms and may inspect all I-9 forms.
The EEOC will notify a business within 10 days after a complaint has been filed. The investigator must be permitted access to all internal human resources documentation, which includes employee incident reports and documentation of corrective actions taken in the past.
An EEOC investigation will be triggered especially quickly if the EEOC has had bad experiences with the company in the past, if they’re afraid of evidence being destroyed, or if they need to see the workplace based on some charge that’s being made.
With regards to FLSA inspections, the Secretary of Labor is empowered to issue subpoenas to compel the attendance of witnesses and the production of documentary evidence. The FLSA may commence inspections at their discretion.
Requesting a search warrant will only delay the search for a brief period of time.
An inspection with a warrant proceeds according to the terms of the warrant, which may be very broad or vague.
By law, a government agency generally must have a search warrant in order to conduct an inspection but requesting one could create an adversarial relationship between your business and the agency and cause the inspector to more thoroughly scrutinize your business when he does return with a warrant.
And agencies can typically obtain search warrants fairly easily.
In the case of EPA inspections, inspections must be limited to the locations, equipment and information which have a direct relationship to the regulated equipment or process.
OSHA provides for an opening conference where the inspector gives his credentials and explains the scope of the visit. EPA procedures do not provide for such a conference but the employer should still ask for this information.
Ask for a receipt listing all of the documents and samples obtained during the inspection.
Ask the inspector to provide a record of his findings.
Make note of any legal violations the inspector has mentioned.
You may receive an informal or statutory letter from the EPA that requests additional information concerning specific records or samples obtained from the inspection. In certain instances, you also may receive a notice of violation or penalty letter outlining violations and proposed penalty.
The investigator will meet with you to discuss any violations and will suggest corrective actions. If you owe back wages because of minimum wage or overtime violations, the investigator will request payment and may ask you to compute the amounts due.
If violations are found, you will have the opportunity to challenge the findings and request a hearing before the Department of Labor.
State overtime and minimum wage laws can vary drastically from federal FLSA laws. Many states require a “living wage” that is significantly higher than the federal minimum wage.
States have their own Fair Employment Practice Agencies often called the state Civil Rights Commission or Division of Human Rights. These agencies are typically responsible for enforcing the individual state’s anti-discrimination laws.
It is natural to view inspections as scary but if a business is vigilant about keeping paperwork current, prepares designated individuals to handle the inspection process, and the business acts respectfully toward the inspector, inspections can serve as an opportunity to impress government agencies and create good will between your business and the agency.
Ensuring that your business is always prepared for an inspection can go a long way in avoiding the sting of enforcement actions.
The Office of the National Ombudsman (housed within the Small Business Administration) assists small businesses when they believe that they have been unfairly treated by a federal agency.
When the office receives a complaint from a business, it contacts the appropriate government agency and works to resolve the situation.
To contact the Ombudsman, visit http:// www.SBA.gov /ombudsman or call 888-REG-FAIR.
Fighting Unjust Enforcement Actions
Did you know? NFIB offers a weekly free webinar on various topics crucial to small businesses. To view previous and upcoming webinars in our Small Business Webinar Series visit: http:// www.NFIB.com /see-webinars NFIB’s Legal Center offers its members access to legal guides on topics such as OSHA and Employment Law, and provides NFIB members FREE legal advice on employment law with the NFIB Employment Law Hotline . For more information, visit: http:// www.NFIB.com /see-legal