what to do when a government inspector knocks on your door

What To Do When a Government Inspector Knocks

On Your Door: How to Prevent and Fight Unjust

Enforcement ActionsPresented By

Karen R. Harned, Esq.Executive Director

NFIB Small Business Legal Center

The NFIB Small Business Legal Center is the voice for small business in the courts and

the legal resource for small business owners nationwide.

While the information provided in this presentation is intended to be accurate, it should not be considered legal advice. The Legal Center cannot be held responsible for

any errors or omissions.

Karen R. Harned, Esq.Executive Director

NFIB Small Business Legal Center

• Many government agencies set up rules dictating specific practices that businesses must follow.

• Small businesses who fail to follow these rules face enforcement actions from federal, state, and local governments.

• Several federal agencies bring enforcement actions against small businesses including OSHA, ICE, and the EPA.

• Many of these government agencies have increased their enforcement efforts informally and through formal enforcement programs.

Background

• OSHA (Occupational Safety & Health Administration).• EPA (Environmental Protection Agency).• ICE (Immigration & Customs Enforcement).• FLSA (Fair Labor Standards Act).• EEOC (EEOC Opportunity Commission).

This Presentation focuses on:

• THE FSLA covers employers and employees who affect interstate commerce, which is basically every employee.

• ICE requires US employers to file I-9s for every individual that they hire.

• OSHA applies to businesses with 10 or more employees.

It Can Happen to Anyone

• 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

• Several government agencies are committed to a renewed emphasis on enforcement.

• OSHA’s Severe Violator Enforcement Program (SVEP) is now in effect, targeting employers who have committed multiple violations.

Why Worry About Enforcement Actions Now?

• ICE has unleashed a new enforcementstrategy targeting those who employillegal aliens, complete with undercoveragents 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.

• 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.

• 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.

• Various statutes empower government agencies to conduct inspections of business facilities.

• Inspections are conducted in order to ensure that businesses are complying with agency rules and the agency will cite businesses for failure to comply with those rules.

What is a Government Inspection?

• After an event occurs, which prompts an inspection such as an accident where an employee is injured, an environmental disaster, or reports of illegal employees working at the business.

• Employers often do not know how the agency found out about the incident.

• Inspections can also occur through random selection.• Businesses often do not get warning about when an

inspector will arrive.

When Do Inspections Occur?

• How a company handles an inspection has a direct impact on whether the agency takes enforcement action and the type of action that is taken.

• Inspections can present businesses with an opportunity to make an excellent impression, preventing needless enforcement actions and future inspections.

Implications of Inspections

• In the event that an enforcement action starts, the inspector will ask for a variety of materials.

• Keeping records of these materials is essential to weathering agency inspections.

Preparing for an Inspection

• Keep OSHA 300 logs up to date, complete with injury and illness summaries from the past 5 years.

• Keep specific injury reports (OSHA 301 logs) for each employee from the past 5 years.

Preparing for an Inspection: OSHA

• Have all training documents in order.• Look at OSHA’s Field Operations Manual For Inspectors:

http://www.osha.gov/OshDoc/Directive_pdf/CPL_02-00-148.pdf


http://www.osha.gov/OshDoc/Directive_pdf/CPL_02-00-148.pdf

Avoid common OSHA 300 log pitfalls:

1) Record all work-related injuries, including those that take place outside of the workplace.

2) Injuries need to be recorded as work restrictions even if the injured employee can still perform useful work.


Avoid common OSHA 300 log pitfalls:

3) Record all medical treatments except for routine treatments such as first aid and cleaning wounds.

4) Track the days that an injured worker spends away from work.

5) Report any death or hospitalization of 3 or more workers to OSHA within 8 hours of its occurrence.


• Become familiar with EPA’s audit protocols: http://www.epa.gov/oecaerth/incentives/auditing/protocol.html

• Establish a formal record-keeping program to ensure that any employee entering data for EPA records is following the same procedures.

Preparing for an Inspection: EPA

http://www.epa.gov/oecaerth/incentives/auditing/protocol.html

• 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.


• Employers should strongly consider adopting an electronic I-9 system which programmatically prevents over- documentation.

• The components of a sound I-9 policy include: completion of I-9’s, appropriate action if an employee does not produce documents by the deadline, and re-verification of temporary work authorization.

Preparing for an Inspection: ICE

Conduct a self-audit of your business. This audit should consist of checking:

-The salary basis: are employees paid a fixed amount per week or does theirpay fluctuate according to quality or quantity of work?

-Examine employee duties: Interview your employees about what they do and evaluate whether some should be reclassified as non-exempt employees.

-Make sure that hourly employees are recording their hours to accurately report start and end times and breaks.

Preparing for an Inspection: FSLA

• Appoint an employee to manage FLSA compliance.

• Create a system to properly log overtime payments.

• Adopt a system for employees to report violations.


• Train everyone on proper timekeeping procedures.

• Require non-exempt employees to sign timesheets to reflect that they have worked only the hours recorded.

• Do not forget that your state may have higher minimum wage requirements than federal law requires.


• 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.


• Have documentation such as personnel files and internal discrimination prevention policies available. EEOC investigators are likely to ask for this information.

• Ensure that all required notices and posters such as the “Equal Opportunity is the Law” poster are posted in the workplace.

• Make sure that you retain personnel documents such as job descriptions, job postings, records of job offers, applications, and interview notes for at least two years.

Preparing for an Inspection: EEOC

• One EPA statute may authorize EPA's officers, employees or representatives to inspect a facility, while another may authorize only officers and employees.

• OSHA safety and health compliance officers are the only ones who may conduct OSHA inspections.

• ICE inspectors conduct all ICE inspections.• Wage and Hour Compliance Officers conduct FLSA inspections.• EEOC investigators conduct EEOC investigations.

ICE

Inspection Authority: Who Can Inspect?

• 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.

Inspection Authority: Notification

• 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.


• You may request one but probably shouldn’t.• 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.

Search Warrants

• Businesses must have plans in place for when an inspector knocks on the door. Your business should be prepared for an inspection to occur tomorrow.

• Plan ahead and designate an individualwho is qualified to meet with the inspector.Your representative need not know the mostabout the business but should be personable.

• Notify guards and receptionists not to admit regulatory personnel beyond reception or gate areas unless you or your representative is notified.

The Inspection

• When the inspector arrives, remain calm, let them in, and offer them coffee.

• OSHA inspectors must introduce themselves and show official ID.

• Determine the scope of the inspection.

The Inspection

• In the case of EPA inspections, inspections must be limited to thelocations, equipment and informationwhich have a direct relationship to theregulated 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.

The Inspection

• The first step of an FLSA inspection, like an OSHA inspection, is an initial conference with the employer to explain needed records.

• The FLSA officer will also request a work space and ask to have a member of the employer's staff available to answer questions.

• The FLSA officer will request recordsincluding payroll, time, governmentcontract, and other records.

• The officer will conduct employee interviews to determine employee duties and assess whether their exemption status is appropriate.

• The inspection will end with a conference where the officer will inform the employer of any violations.

The Inspection

• Inform the inspector about areas in the facility which contain or might reveal trade secrets and safety or health hazards the inspector might be exposed to during the inspection.

• The inspector will ask to see the physical site related to the reason for their visit. It is your right to accompany the inspector during the investigation.

The Inspection

• Take good notes. You might need them to fight an unjust enforcement action or to contest a citation if the inspector improperly documents what occurred during the inspection.

• Use your camera to take the samephotos the inspector takes.

• Ask to be present during any employee interviews.• Be polite and treat the inspector respectfully.• Think before you speak and answer all questions honestly.

The Inspection

• In the case of an EPA or OSHA inspection, take your own samples of everything the inspector takes samples of.

• Show the inspector only those documents or records that he or she is legally entitled to see.

The Inspection

• The EEOC investigator will require you to file a Statement of Position telling your side of the story.

• If the discrimination claim is found to be valid, then the inspector will conduct an on-site investigation.

• The investigator will conduct interviews of witnesses, managers, and the complaining employee.

• The investigator is entitled to access of all documentation and will request to see it during the inspection.

The Inspection

DO NOT:

• Volunteer information unrelated to the visit.• Ask a question about a regulation unrelated to the visit.• Lie, deceive, cover up, or forge documentation.

The Inspection

• Request an exit conference with the inspector.• Ask the inspector to disclose any adverse findings and

take immediate action to correct simple violations whenever possible.

• Request a copy of the final inspection report.

The End of the Inspection

• At the end of the inspection, the inspector will often tell you about the violations and when you should expect to receive the letter with the citations and fines.

• You typically have 15 days after receiving the letter to request an informal conference and contest the citations.

• OSHA must issue a citation and proposed penalty within six months of the violation.

The End of the Inspection: OSHA

• Ask for a receipt listing all of the documentsand samples obtained during the inspection.

• Ask the inspector to provide a record ofhis 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 End of the Inspection: EPA

• ICE reviews I-9 forms as opposed to entering the facility and conducting a walk-through inspection like OSHA and the EPA.

• ICE will notify the audited party, in writing, of the results of the inspection once completed.

• This notice will be a compliance letter telling your business that you are in compliance, a notice of intent to fine, or some other type of notice alerting your business to discrepancies in the I-9s.

The End of the Inspection: ICE

• 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.

The End of the Inspection: FSLA

• After the investigation is over, the EEOC will make an official determination of the claim.

• The investigator has the power to require specific remedies, including compensatory payments, reestablishment of position or wage, and back pay for fired claimants.

• If the EEOC rules in favor of the company, the employee has the right to personally sue the company in federal court within 90 days in most instances.

The End of the Inspection: EEOC

• State and local governments also conduct inspections under environmental and OSHA statutes.

• Each state has its own environmental enforcement agency. • 25 states currently have OSHA approved state OSHA plans. The standards the state

plans set must be “at least as effective as” federal standards and may be more effective.

• Many local law enforcement officers have been trained by ICE.

State Enforcement Actions

• 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.

State Enforcement Actions

• 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.

Conclusion

• The best way to prevent inspections and to be prepared when inspections do occur is to have paperwork in order and good recordkeeping.

• Never, ever retaliate against an employee for filing a claim.

Important Lessons

• You can fight unjust 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/ombudsmanor call 888-REG-FAIR.

Fighting Unjust Enforcement Actions

http://www.sba.gov/ombudsman



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