Department of Labor knocking on my Medical Practice's Door; what am I required to maintain?

Question:

Jennifer,
 
Someone from the Department of Labor showed up at my practice last week asking to see my “documents”.  I asked him to leave and come back another time, and he left a notice asking me for a lot of records.  What am I required to show him?
 
Thanks,
Dr. K
 
Answer:
 
Dr. K, thanks for your question.  It seems the Department of Labor has initiated an increasing amount of audits of late, which may be in response to a complaint by an employee, competitor or a patient, or a random audit in an effort to encourage compliance and/or collect for fines.   
 
 Medical practices are covered under the Federal and New York State laws which establish broad authority in the regulation of all employer/employee relations.  Under relevant authority, where there is “reasonable cause to believe that the required accounting standards are not being maintained or that the books do not accurately reflect the financial condition” and transactions of the employer, an authorized agent may examine the books and records of the employer, subpoena witnesses and documents, and make such other investigation as is necessary to determine the facts relative thereto.  See 12 NYCRR 550-3.2.
 
Applicable New York State regulations require that, at a minimum, employers must maintain, for at least 6 years, payroll records, including each employee’s: (1) name and address; (2) social security number; (3) wage rate; (4) the number of hours worked daily and weekly, including the time of arrival and departure of each employee working a split shift or spread of hours exceeding 10; (5) when a piece-rate method of payment is used, the number of units produced daily and weekly; (6) the amount of gross wages; (7) deductions from gross wages (8) allowances, if any, claimed as part of the minimum wage; (9) net wages paid; and (10) student classification.  
 
Additionally, every NYS employer must maintain, for at least 5 years, detailed and accurate books and records of account which shall include, without limitation: (1) Bank statements; (2) Gross disbursements - (i) the amount and date of each disbursement, (ii) the name of the recipient of each disbursement, and (iii) the purpose of each disbursement; (3) Cancelled checks; (4) Collective bargaining agreements; (5) Payroll sheets; and (6) Petty cash vouchers. See 12 NYCRR 550-3.2.
 
Due to the increase is audits, I recommend you review your books and make sure you are complying with record retention requirements because the penalties may be severe:  Failing to comply with record retention requirements opens you up to criminal penalties, including the charge of a misdemeanor or felony, fines are also imposed ranging from $500 - $20,000; the severity of liability depends on how many violations, types of violations and frequency.    http://law.onecle.com/new-york/labor/LAB0198-A_198-A.html   Because the requirements for record documentation and retention are laid out under the Labor Laws, failing to comply and risking such liability, when so easily prevented, is inadvisable (to put it lightly.)

For additional information on this topic, contact Jennifer Kirschenbaum at (516)-747-6700 ext. 302 or at Jennifer@Kirschenbaumesq.com.

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