Department of Labor Audits Continue to Rise

The Department of Labor (DOL) continues to step up the number of audits it conducts each year. It’s more important than ever that employers be aware that everything from their benefits plans to their financial dealings and other operations could be put under review in the event of a DOL audit. Holbrook & Manter is committed to preparing the businesses we work with for any type of event that could affect day-to-day operations, and a DOL audit can do just that. Here is some important information on the topic:

Why me?

Employers can be targeted for an audit for a number of reasons. Sometimes the selection is random. The Department of Labor often zeros in on specific industries for audits and your business could fall into one of those categories. Other times the audit is a result of a case referral from the IRS or the SEC. In some cases it is more personal, and the audit is triggered by a complaint that is filed with the Department of Labor by a former or current employee who suspects a possible violation has been committed.

The Employee Retirement Income Security Act (ERISA) is a federal law that regulates group-sponsored benefits plans. This law brings forth requirements for certain plan features and calls on employers to provide detailed information about those plans with the government. ERISA also requires employers to disclose plan information to all eligible employees by certain deadlines. If it is determined that an employer is not in compliance with ERISA, costly government penalties and possible employee lawsuits could be the end result. Employers of all sizes are subject to ERISA if they offer any type of employer-provided group benefits plan such as health, dental vision, life insurance, retirement benefits, etc. The only exempt employers are churches and government entities.

No matter what prompts it, important steps must be taken in the event that the DOL notifies you that an audit of your business is about to begin.

 Now what?

Don’t panic. It’s time to contact the right people. Begin by notifying your legal counsel, CPA, insurance agent as you will want them to work alongside you as you respond to DOL inquires and the DOL staff swarm into your business.

Don’t discuss the pending audit with employees until consulting with legal counsel and your financial partners. Use the time between the DOL’s initial contact and the arrival of the DOL onsite to ensure that all employee handbooks, policies and benefits information is accurate, current and representative of how your business is run. This review should include all descriptions and information regarding each and every benefit plan, from health to 401(k). Make sure all recordkeeping efforts for all aspects of the business are up to date.

 Once the DOL staff begins their work on-site, be courteous and cooperative and provide them with a private place to work.  Stay in constant contact with your legal counsel and financial partners and consult with them before any employee interviews are conducted, turning over any materials and certainly before you sign off on anything the DOL presents to you.  Should a violation be discovered at the conclusion of the DOL audit, your legal counsel and financial partners will guide you through the necessary next steps.

Could this have been avoided?

Being ready for a DOL audit is your best defense. They can’t always be avoided, but you can always be prepared. Be diligent when it comes to all documents you share with employees. Make sure they are accurate and in line with all current laws. Maintain an ERISA policy that is documented and readily available to employees and other required parties. Conduct internal audits of all benefit plans, employee polices and records that are kept.

The journey to compliance isn’t one you have to travel alone. More and more businesses are investing in services that help manage the various elements that fall under the DOL audit umbrella. ERISAEdge is one offering, which is designed to keep businesses current with various compliance requirements. A service of this nature can help you keep track of all deadlines, help to submit required paperwork and provide you access to benefits professionals that are highly skilled in ERISA law. Investing in this type of service not only takes a good deal of compliance pressure off your company, but could also save the company  money.  The investment in the service provides peace of mind and is most times far less expensive than the fines and other costs associated with DOL violations.

 Am I on the right track?

Contacting the team at Holbrook & Manter should be your first step when it comes to making sure your business is taking a proactive approach to the elements that could be reviewed in the event of a DOL audit. We can look at your current practices, make recommendations for needed changes to your business practices and benefits offerings, and help you pinpoint management services to assist you if that is of interest.

The possibility for this type of audit is very real for today’s business owner. We can help. Contact us today.