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One Thing Leads to Another: Helping Employers Avoid Multiple Penalties

Do what they say
Say what you mean
One thing leads to another
You told me something wrong
I know I listen too long
But then one thing leads to another

-The Fixx (1983)

Pursuant to Conn.Gen.Stat., sec. 31-76a(a), upon receipt of a complaint for a wage act violation or for improper workers' compensation coverage, the Connecticut Department of Labor is authorized to initiate an investigation.  It is empowered to enter the place of business and examine any payroll records or other records it chooses.  This may have a spiraling effect.

Imagine one of your employees is hurt on the job and you did not have workers' compensation coverage in place or you had erroneously misclassified the employee as an independent contractor.  An investigator from the Connecticut Department of Labor may come out to the job site, unannounced, and ask questions of your employees, potentially without your knowledge.  In addition to a Stop Work Order, preventing you from continuing your business until satisfactory proof of workers' compensation coverage is obtained, and paying a fine to have it lifted, the investigation may continue, revealing further problems.

The Wage and Workplace Standards Division of the CT DOL uses a boilerplate form accompanying a Stop Work Order.  The investigator checks off, depending on the circumstances, one, some, or all of the following categories of documents that are to be provided:

  1. Names and addresses for workers on site
  2. W-4s and I-9s for all workers
  3. Time and payroll records for all workers on site.
  4. Contract with the General Contractor
  5. Any contracts with other subcontractors
  6. Requisitions for payments
  7. Copy of CT Registration with Department of Revenue Services
  8. Copy of CT Registration with Department of Unemployment
  9. Copy of Bond received from Department of Revenue Services
  10. Full copy of Connecticut Workers Compensation Policy
  11. Copy of Connecticut Licenses
  12. List of dates that work was performed on site.

Although there are arguments to be made that one or more of the categories may exceed statutory authorization, costs of non-compliance may be significant.  Moreover, the statute grants subpoena authority, so that failure to comply voluntarily could soon become a mandatory court order.

 The first three categories could be argued to help determine how many employees there were, on what dates, and thus whether insurance coverage was sufficient at those times.  Providing the information, though, could trigger further problems.

If your employee(s) spoke with the investigator, and your records do not match up as to whether they are on payroll, whether the hours reported match claimed schedule(s), whether overtime was paid, whether employees were paid on a weekly basis (absent DOL waiver), whether they are properly treated as independent contractors, etc., then you, as the employer, can face a host of consequences.

It may be determined that employees were misclassified as independent contractors or as FLSA exempt.  This alone could give rise to overtime and record keeping violations.  It may be determined that your brother, who volunteered to run the register, must be treated as an employee, who must be paid minimum wage and overtime.  And it may turn out that some employees may not lawfully be permitted to work in the United States.

Once the Department of Labor gets its foot in the door with an employer, it effectively has free range to ask questions and rummage through records to determine if any violations of any of the wage laws occured, even if the employer is not liable on the initial complaint.  If an employer is contacted by the CT Department of Labor or is concerned of what might happen in the event of an investigation, it should contact experienced employment counsel to fight claims of violations and help otherwise get the employer in compliance.

CT DOL 31-76a Form

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