A Company’s Problem with one Regulator can become a Problem with Other Government Regulators

As most employers know, various employment and tax government agencies have memoranda of understanding (MOUs) in place whereby those agencies agree to share information with one another about “bad actor” employers.  As a result of these intra-agency agreements, an employer who may be audited or found guilty of some regulatory impropriety (such as worker misclassification, or unpaid overtime) by the U.S. Department of Labor (“DOL”) may be referred to the IRS for review of the impact of such misclassification on the employer’s employment taxes.  Beyond the formal MOUs that are in place between the agencies, there are more informal arrangements in place whereby agency representatives will refer cases to one another. 

In a recent example, a worker called the DOL’s Wage and Hour Division to complain that he and several other co-workers had not received their wages on their regular payday.   The DOL investigated the matter and contacted the employer of the worker.  One of the company supervisors was able to identify the employee who had complained to the DOL and, allegedly, threatened that “there would be consequences.” The worker was then summoned to a meeting with a manager and human resources, where he was questioned about a number of issues, including the DOL complaint. He was then terminated, for violations of various policies about which he had never been previously warned. 

The employee filed a complaint under the National Labor Relations Act (the “NLRA”) with the National Labor Relations Board.  The NLRA protects employees’ rights to engage in concerted activity about their terms and conditions of employment. The NLRB argued on behalf of the employee, and an NLRB Administrative Law Judge agreed, that the worker engaged in “protected concerted activity” when he called the DOL to complain about the employer’s failure to pay wages. The ALJ further found that the employer failed to show that it would have fired the worker absent his protected concerted activity.

In the NLRB’s press release about this case, the NLRB specifically noted that it had worked in collaboration with the US DOL in prosecution of this case.

The lesson for employers is to be mindful of all the potential government agencies that could become involved from one single employee complaint or inquiry.  Employers should consult counsel in any situation that might have employment law implications, and even situations where there is even the possibility of such consequences.