Wage Violations May Trigger Audits and Immigration Inspections

The U.S. Department of Labor may be supplying information on minimum wage and overtime violations to other federal agencies, triggering immigration inspections, according to the prestigious Society for Human Resource Management or SHRM.

In September 2010, ICE, the U.S. Immigration and Customs Enforcement agency, notified hundreds of companies that they had been selected for inspections of I-9 forms and compliance with immigration and hiring laws. According to an unnamed attorney affiliated with SHRM, the inspections may have been triggered by the employer’s violations of the FLSA, the federal Fair Labor Standards Act. The FLSA is the primary federal minimum wage and overtime statute.

At the same time, the U. S. Department of Labor Wage and Hour Division revealed plans to audit a number of industries this fall, targeting employers who misclassify employees as independent contractors in order to avoid paying workers’ comp and employment taxes. The inspections will target construction and renovation industries, as well as other sectors that often misclassify employees as 1099 workers.

As a reminder, when the employer controls when, where or how the work is performed, the worker is an employee under federal law. For example, if work must be performed onsite, or if the employer determines the work schedule, the worker is an employee and not an independent contractor under federal law.

Some states, such as California, set limits that are even more stringent on independent contractor status.

The intention is to increase enforcement against employers who may knowingly hire undocumented workers and then pay less than the minimum wage, or avoid overtime payments under the FLSA.

Attorneys from Washington D.C. to Austin, Texas have reported that complaints of FLSA violations are often followed by ICE inspections. Employers should be proactive by ensuing that their I-9 and hiring documents are in order, that employees are not misclassified as independent contractors, and that they are conforming with all the provisions of the Fair Labor Standards Act. In particular, employers should be scrupulous about properly classifying non-exempt employees and paying overtime, as well as paying employees for all hours worked.

In the past, employers with FLSA complaints were no more likely to be audited than other companies.

Once an employer receives notice of an ICE inspection, the employer could be charged with obstruction of justice of they destroy any forms covered by that notice. Any employer who has received notice of an ICE inspection may want to contact an attorney.