Abrahams Wolf-Rodda, LLC

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Is it Better to Be King? Not if You're Gyro King

The Fair Labor Standards Act (FLSA) authorizes the U.S. Department of Labor (DOL) to investigate, gather data, interview employees, enter and inspect work sites and review records as well as to gather data about hours worked and compensation paid. It can be quite intrusive; however, employers are generally obligated to comply with the investigator’s requests. DOL has posted guidance regarding how it conducts it investigations, particularly how it conducts visits to employers.

For federal service contractors, you may be required to provide information about the Service Contract Act (“SCA”) covered contracts your company has. And, you might be required to provide not only payroll and data regarding hours worked by employees, but also information about your company’s benefits to ensure that the company is in compliance with SCA mandated health and welfare requirements. And for the Davis-Bacon Act (“DBA”) audits, you will have to prove you paid the prevailing wages and benefits set forth in your certified payrolls.

DOL investigators are entrusted with considerable authority when they conduct investigations. Along with that authority comes considerable discretion that can work to the benefit or detriment of an employer that can vary based on the investigator’s perception as to whether the employer is, shall we say, a good egg. Being uncooperative can really irritate an investigator and, if things get out of hand, could lead to more intrusive methods of investigation, which brings us to Gyro King.

Manhattan Halal Gyro King LLC operates several restaurants in northern New Jersey. DOL commenced a compliance investigation of Gyro King. Sometimes such investigations are triggered by an employee complaint. At other times, there’s no allegation of a violation when, as sometimes happens, DOL initiates an investigation as part of a broader effort to address perceived noncompliance in a particular industry. We don’t know what prompted the investigation here; however, it does appear that things went off the rails.

It is apparent that DOL wasn’t happy with Gyro King. At. All. This is because the company did not furnish records requested by DOL. Initially, such a request comes in the form of an investigation letter that identifies the information the investigator wishes to review and notifies the employer of its intent to visit the workplace and interview employees. Employers should not ignore this. In fact, a quick response often can garner you some flexibility to give you time to collect records and, perhaps, give you time to manage your workplace schedule so that interviews don’t unduly interfere with your operations. Nothing’s guaranteed in this regard; however, cooperation often is reciprocated.

In the case of Gyro King, the apparent lack of cooperation led DOL to issue an administrative subpoena in an effort to compel the employer’s cooperation. Clearly, the subpoena didn’t get a response. So, DOL went to court and obtained an order directing the employer to comply with the subpoena. Well, they didn’t comply with that either. DOL then asked the court to find Gyro King in civil contempt. And again, that didn’t work even in the face of fines of $1,000 per day of further noncompliance. So DOL asked the court to have the employer arrested and held in custody until the records were produced. And that’s exactly what happened—the owner of Gyro King was arrested last week.

I don’t know if DOL has gotten the documents and information it seeks yet. But, I trust that the employer will start cooperating if he wants to get out of jail. I am at a loss as to why it got this far. No doubt investigations are intrusive, but everything goes much better when you demonstrate that you’re engaged.

And it’s certainly preferable to a perp walk.