3 Tips For Employers That Run Wage And Hour Self-Audits

Law360—By Jon Steingart

Management-side attorneys frequently advise clients to review their wage and hour policies to ensure they comply with legal requirements, or at least minimize gray areas.

Periodic self-audits are a common strategy...

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Melissa Stewart, a partner at Outten & Golden LLP who represents workers in wage and hour cases, said employers that point to a self-audit as a sign of their good faith should know that doing so can bring a lot of their internal discussions into the open, even the parts that are normally protected by a privilege.

"If it's claiming a good-faith defense, it can't hide advice that it got," Stewart told Law360. "We get to know everything that informed its state of mind, including the stuff that it wasn't going to rely on because it decided to ignore."

"If there's an attorney audit that uncovered problems, we would argue that the company thus waives the privilege for that information because it's putting its own state of mind at issue," she said.

Even when an employer changes practices based on an expert's recommendation, there are still opportunities for plaintiffs' lawyers to try to use the audit to help their clients, Stewart said.

If workers in positions that haven't been audited file a suit alleging that they aren't paid correctly, the fact that the employer had audited other positions could strengthen their argument that the business failed to go through the due diligence of ascertaining its pay obligations, Stewart said.

"It shows you that the company knew how to check on its compliance and chose to only do a more limited job," she said.