Hiring Teens? How to Avoid a Department of Labor Audit

Many businesses reopening after lockdowns are scrambling to find workers. Due to labor shortages for some types of jobs, some employers are turning to the youth labor market. Industries include food and beverage, retail, healthcare, and sports and recreation.

Consider the numbers from April 2021; according to the Bureau of Labor Statistics, of 266,000 jobs add that month, 16- to 19-year-olds accounted for 256,000.

“Teenagers have become a valuable asset when it comes to filling open positions required to keep businesses running. They may not have a lot of experience, but at least they’re showing up.” Robert Farrington, “Job Shortage is Boosting Demand for Teen Workers,” Forbes

Do you understand FLSA laws regarding youth employment?

If you are adding teens to your payroll for the first time, we encourage you to understand teenage labor laws and review The Fair Labor Standards Act.

First off, understand that the FLSA has special rules for teens aged 14-18. Not surprisingly, the strictest regulations apply to 14- and 15-year-olds. The law limit the hours employees can work and which jobs they can perform.

Specifically, the FLSA prohibits employers from requiring 14- and 15-year-olds to work:

• More than:
  • 3 hours on a school day, including Friday;
  • 18 hours per week when school is in session;
  • 8 hours per day when school is not in session;
  • 40 hours per week when school is not in session; and
• Before 7:00 a.m. or after 7:00 p.m. on any day, except from June 1 through Labor Day, when nighttime work hours are extended to 9:00 p.m

In addition, some states have provisions with a higher standard than the federal laws.

Even employers with the best intentions make mistakes. Let’s look at a DOL audit that took place a couple years ago.

DOL Child Labor Audit Case Study

In August of 2018, the U.S. Department of Labor contacted the city of Orem, Utah to give them notice of an audit. The labor practices in question took place at the Scera Park Pools, a public waterpark operated by the city.

During the investigation, DOL auditors reviewed the timecards and schedules of 50 pool employees under the age of 16.

State Law vs Federal Law

Unfortunately, the city had been following state law which had a lower standard than the federal law. Utah law restricts employees younger than 16 from working past 9:30 p.m, thirty minutes later than the federal law.

The DOL audit revealed that 25 15-year-olds worked shifts longer than the allotted three hours. In addition, they worked past 9:00 p.m.

“If they clocked in two minutes ahead or two minutes after, that’s a violation of federal law. We were also scheduling according to state law, which allowed us to schedule those employees until 9:30, federal law was 9:00.” -Karl Hirst, Director of Recreation

The DOL found Orem city in violation of child labor provisions in the FLSA. The fine was $16,000. Indeed, it was an expensive oversight that cost the taxpayers unnecessarily.

Are You at Risk of a Violation?

Orem city’s DOL audit experience raises key issues for employers:

• Do you know your state laws and how they compare to federal laws? Do your managers know them?
• At your company, do you allow 15-year-olds and 16-year-olds to swap shifts without manager review?
• Does your timekeeping system allow out-of-schedule punches?
• If you were audited, could you locate scheduling paperwork and timecards for the past three years?

Automated Employee Timekeeping Software

If you employ youth, consider automated employee time tracking, scheduling, and reporting software. The layers of regulation are simply too complicated for manual tracking.

How Does a Time and Attendance System Protect Me?

Here are some of the software features that help you comply:

• Configurable schedule rules with threshold warnings
• Shift trading with manager moderation
• Customizable pay rules simplify minimum wage compliance
• Employee profiles track legal scheduling requirements
• Meal/break lockout prohibits early clock-in of mandatory breaks
• Flexible scripting for state or local laws
• Audit-ready payroll/scheduling records and reports

Time and Attendance Self-Audit

To protect yourself from practices that could trigger an investigation, perform a self-audit. Use this checklist as a guide to evaluate your practices. This checklist focuses on time and attendance, but you can find a complete HR compliance checklist here: 2021 HR Compliance Checklist.

We also recommend that you consult legal, accounting, payroll and HR experts as an added measure of protection.

Employee Details

1. Check actual job duties to verify that underage employees aren’t performing tasks deemed dangerous by the DOL
2. Make sure job descriptions accurately describe work performed
3. Train staff (especially managers) on wage and hour compliance
4. Encourage employees to resolve wage questions directly

Timekeeping

1. Keep an updated, written timekeeping policy in your employee handbook
   • Regularly remind employees of timekeeping policy
   • Test employees for understanding of timekeeping policy
2. Pay all non-exempt workers for all work performed, including pre- and post-shift work and overtime
3. Verify meals breaks are taken
4. Follow clock-in time rounding rules applicable to your area and ensure rounding is fair in practice

Recordkeeping

You can obey the rules but fail an audit if you don’t have the paperwork to back it up. Keep accurate payroll records:

Data Review and Reporting

Automated timekeeping simplifies reporting and the benefits aren’t limited to compliance. Importantly, reporting can help you make better labor management decisions.

1. Review time data:
   • Hours scheduled versus actual
   • Overtime requests versus actual
   • Leave requests versus actual
   • Supporting documents for time off taken (doctor’s note, jury duty)
   • Signed timesheets

What to do if the Department of Labor Audits Your Business

The Society for Human Resource Management (SHRM) recommends the following if the DOL initiates an investigation:

• Contact the auditor to find out specific information about the audit. Key questions to ask are the focus of the investigation (e.g., overtime pay compliance, exempt vs. non-exempt classification, minimum wage compliance), the time period for records the auditor wants to review, and the names of any employees that may be interviewed.
• The DOL usually provides little advance notice of an audit. However, you can request time to gather records. Typically, the amount of time an employer will have will depend on the auditor.
• Gather the records as directed by the auditor. Be prepared to provide documentation related to the company’s policies and procedures. Keep track of exactly what information was provided. Do not provide records other than what the auditor requests.
• Designate one or two company representatives to work with the auditor. Some employers choose their legal counsel; others will designate senior managers.
• During the audit, be courteous and cooperative and provide a quiet area for the auditor to work in.
• At the end of the audit, ask for a summary of the results. This information will help an employer review options for resolutions if any violations are found. If violations are found, employers are encouraged to consult legal counsel before agreeing to a settlement. (SHRM)

WorkforceHub Simplifies Small Business HR Compliance

To prevent a DOL violation, choose intuitive software that helps you follow best practices. WorkforceHub is a unified Human Resources system intentionally designed for the complexities of small business compliance. Visit workforcehub.com to schedule a demo.