Last season, many landscape companies were audited by the Department of Labor (DOL). Here, Scot LeDue, vice president/general manager. A Perfect Landscape, Inc., and Marie Peacock, owner GARDENZ, interacted directly with auditors when their firms were audited last season. Here, they share lessons learned and advice for others who may be visited by DOL this season.

Q: What were you surprised to learn?

SL: You have to make sure nobody is paid below the minimum wage – ever. You can’t withhold money from an employee’s paycheck if they break a piece of equipment. As a business owner, you have to eat that loss. Make sure you have good insurance.

MP: I read the statute differently than what the auditor told me. If employees take a lunch break of less than 30 minutes, you have to pay them. It’s hard because many employees want to work through lunch and leave when the job is complete. But they must note on their timecard how long their break was and sign it. So I have to re-educate my employees about noting the breaks, and signing and dating the time cards. And I have to pay back wages to those who didn’t take at least 30 minutes - even if they no longer work here.

Q: What advice do you have for other business owners who may be targeted for an audit?

SL: I have a few tips:

1. If the auditor isn’t being treated politely, it could be uncomfortable. If you are antagonistic about the audit, he or she may question how you treat your employees. How you interact with the auditor can go a long way. 
2. There are specific criteria for employees compared to contractors, and the DOL looks at who you are classifying that way and why. Ask your CPA if you are unsure. 
3. If you question the findings of your audit, you can ask for the case to be forwarded to the auditor’s manager for another layer of oversight.

MP: Don’t think you are too small to be audited. If employees use a credit card, you may be audited. I think the biggest mistake people make is classifying people who work for you as contractors when they are truly employees. You may owe back taxes and wages if that is the case.

Q: What was the audit’s outcome?

MP: I was in compliance with the minimum wage standards and paying overtime. I was not in compliance with paying wages to employees for taking less than a 30-minute break and for not posting a minimum wage sign. The auditor said the latter was not a fineable offense, but that I needed to comply with that. I could post a sign in the workplace, put a copy in the work trucks or provide a copy to each employee.

I did have to pay back wages only to FLSA-covered employees who took less than a 30-minute lunch break, and it wound up being less than $200. I was given 28 days to make full payment and I must provide evidence that I made payment. The auditor said it was up to me whether I took out taxes or not. I found it interesting that if you are unable to locate an employee to whom you owe back wages after three years, the money goes to the U.S. Treasury, not back to the employer.

Read more in this issue of Colorado Green NOW:
7 Steps to Strategic Success in 2015
How green is your vision?
Are you using ALCC’s FREE classified ads?
Cell phone liability extends to employers