When The Bureau Comes Knocking…Literally
Recently, our office has received many questions regarding investigations conducted by the Division of Labor Standards Enforcement’s (“DLSE”) Bureau of Field Enforcement, or “BOFE” for short. In some cases, the questions stem from a BOFE subpoena requesting that the employer provide information ranging from payroll records to text messages. In other cases, the questions stem from BOFE investigators conducting an unannounced inspection of an employer’s worksite. This article is intended to provide a brief overview of the BOFE including the general process by which it investigates potential labor law violations.
What Is The BOFE?
The BOFE is one of several units of the DLSE. Its mandate is set forth in Labor Code section 90.5(a), which states in relevant part:
It is the policy of this state to vigorously enforce minimum labor standards in order to ensure employees are not required or permitted to work under substandard unlawful conditions or for employers that have not secured the payment of compensation, and to protect employers who comply with the law from those who attempt to gain a competitive advantage at the expense of their workers by failing to comply with minimum labor standards.
Lab. Code §90.5(a). The BOFE is described as “[o]ne of the Division’s key enforcement arms” that “investigates complaints and takes enforcement actions to ensure that employees are neither required nor permitted to work under unlawful conditions.” Actions taken by the BOFE include but are not limited to the following: (1) enforcement of minimum wage and overtime requirements; (2) enforcement of employers’ requirement to carry workers’ compensation insurance; (3) audits of payroll records; (4) collection of unpaid wages; and (5) seeking injunctive relief to prevent further violations of the law.
How Does The BOFE Generally Initiate and Conduct Its Investigations?
As of the date of this article, I have not come across any information which suggests that the BOFE is working with the Central Intelligence Agency. Rather, the phrase “C.I.A. Citation” is a quick way of illustrating the steps involved in BOFE investigations, namely; (1) Complaint; (2) Inspection; (3) Audit; and (4) Citation. Although the BOFE has wide latitude in how it conducts its investigations, below briefly describes the general approach that we have seen.
BOFE investigations typically begin with a complaint or report of potential labor law violations being filed with the DLSE. The BOFE has an actual form entitled “Report of Labor Law Violation” which includes several sections such as “Employer Reported,” Work Hours and Wages,” and “Suspected Violations of Employer.” The BOFE subsequently reviews the complaint and/or report to determine whether to commence an investigation of the employer.
In recent years, it appears that the BOFE has switched from a randomized investigative approach to a more concentrated “complaint-based” investigative approach. Importantly, however, the BOFE does not rely solely on complaints and reports. The BOFE also works with various state and local agencies, as well as community organizations and associations in a collaborative effort to produce leads of potential labor law violations.
After it reviews and analyzes the complaint and/or report, and determines that an investigation is warranted, the BOFE sends its investigators to the employer’s worksite to conduct an inspection. In our experience, it appears that such onsite inspections vary in terms of depth. For example, some onsite inspections may involve BOFE investigators requesting and acquiring employees’ personnel files, payroll records, and other employment-related information. Other inspections may involve BOFE investigators interviewing workers and asking questions regarding their wages, hours, and working conditions. It appears that the BOFE has great latitude in conducting onsite inspections. Importantly, there appears to be no requirement that the BOFE notify the employer prior to conducting the onsite inspection. Additionally, many BOFE investigations involve “multiple” on-site inspections (i.e. an initial on-site inspection and follow up on-site inspections).
In the event the BOFE inspection reveals violations (such as unpaid minimum and overtime wages), it will either conduct its own audit of payroll records or request that the employer conduct a “self-audit.” Although it may appear at first glance that an employer has a choice in the matter, the DLSE 2015 – 2016 Report suggests otherwise:
“The Division has also initiated a program for employers to conduct self-initiated audits to augment the investigation conducted in response to specific complaints. If employers are unable or unwilling to complete the self-audit, the Division has stressed conducting a thorough investigation and conducting the audits to discover unpaid wages.”
DLSE 2015 – 2016 Report at p. 6 (emphasis added). The highlighted verbiage strongly suggests that the BOFE may investigate an employer for additional labor law violations in the event it decides not to conduct a self-audit. Moreover, employers do not have complete autonomy in conducting self-audits. BOFE investigators typically monitor the calculations and advise employers of any changes if necessary. As with its other actions, it appears that the BOFE has great latitude in terms of monitoring self-audits.
At the conclusion of the audit phase, the BOFE issues a citation based on the violations. What is important to note here, is that in addition to assessing an employer for the underlying violation (e.g. unpaid wages), the BOFE may also assess civil penalties and liquidated damages. For example, Labor Code section 1194.2 provides that “an employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon.” Lab. Code §1194.2 (emphasis added). As such, assuming an employer as a result of a BOFE investigation is assessed $500,000 in unpaid minimum wages, Labor Code section 1194.2 would double that amount to $1 million, and tack on interest. After the BOFE issues the citation, the matter is referred to the DLSE’s Judgement Enforcement Unit for collection.
What To Do If The Bureau Comes Knocking
It is important for employers to be proactive in ensuring that their policies and procedures are in strict compliance with California law. Indeed, implementing compliant policies and procedures will greatly reduce the risk of a BOFE complaint and/or report. However, in the event the BOFE does come knocking, we strongly suggest not dealing with the Bureau alone.
 Division of Labor Standards Enforcement, 2015 – 2016 Fiscal Year Report On The Effectiveness Of The Bureau Of Field Enforcement (hereinafter referred to as “DLSE 2015 – 2016 Report”) at p. 1.