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How Does the Department of Labor Affect Small Business?

Skye Schooley
Skye Schooley

Learn about the agencies and laws that the Department of Labor (DOL) enforces and how it impacts your business.

Employers need to be mindful of the federal and state agencies that protect their employees' rights. One of the most important agencies they should have a clear understanding of is the U.S. Department of Labor (DOL). To ensure you are maintaining compliance, it is important to understand what the DOL does, what federal laws it enforces, and how it impacts your business.

What is the Department of Labor (DOL)?

The U.S. Department of Labor is a federal agency that monitors and enforces a variety of employment-related laws that protect workers and improve workplace conditions (e.g., occupational health and safety, wage and hour obligations, and federal unemployment insurance benefits).

Vanessa Matsis-McCready, associate general counsel and director of human resources at Engage PEO, said the DOL also sets standards for employing minors, and monitors and enforces rules under the Immigration and Nationality Act for foreign nationals authorized to work in the United States with employment-related visas.

What does the Department of Labor do?

The Department of Labor declares, monitors, and enforces federal employment laws and regulations. They can investigate employers for potential employment-law violations and impose penalties on those deemed in violation.

"The DOL has the power to investigate and audit employers and enforce labor and employment laws, it can assess fines and impose penalties against employers, and it can award back pay to employees," Matsis-McCready told business.com. "In addition to setting policies, it creates and makes available a plethora of information and posters for employers and employees."

Keep in mind that although the Department of Labor operates at a federal level, some states may have additional labor departments to manage employment law violations at a state level.

What does the Secretary of Labor do?

The U.S. Secretary of Labor is a member of the U.S. Cabinet and is the head of the Department of Labor. They control the DOL, suggest and enforce union and workplace laws, and manage business-person controversies. The current U.S. Secretary of Labor is Eugene Scalia.

Which agencies fall under the Department of Labor?

The DOL is a wide-reaching department of the federal government that includes nearly 30 different agencies. These offices and agencies work to protect employees, promote safe work environments, and enforce their respective labor laws.

Although you should familiarize yourself with as many of the bureaus, offices, and departments as possible, here are 10 that every business owner should be aware of.

  1. Bureau of International Labor Affairs (ILAB) – The Bureau of International Labor Affairs promotes a fair global workforce, enforces trade commitments, strengthens global labor standards, and combats international child labor, human trafficking and forced labor. 
  1. Employee Benefits Security Administration (EBSA) – The Employee Benefits Security Administration enforces and administers laws that protect employee retirement, health, and other workplace-related benefits. Some laws include the Employee Retirement Income Security Act (ERISA), the Comprehensive Omnibus Budget Reconciliation Act of 1985 (COBRA), and the Health Insurance Portability and Accountability Act (HIPAA). 
  1. Occupational Safety and Health Administration (OSHA) – The Occupational Safety and Health Administration enforces laws like the Occupational Safety and Health (OSH) Act to ensure safe and healthy workplace conditions.
  1. Office of Disability Employment Policy (ODEP) – The Office of Disability Employment Policy is a non-regulatory federal agency that develops and influences policies that increase the opportunity for workplace success for people with disabilities.
  1. Office of Federal Contract Compliance Programs (OFCCP) – The Office of Federal Contract Compliance Programs is responsible for protecting federal government workers and promoting diversity. It ensures that those working with the federal government (contractors and subcontractors) comply with the legal requirement to take affirmative action and avoid discrimination.
  1. Office of the Inspector General (OIG) – The Office of Inspector General audits every program and operation of the DOL to ensure each one is maintaining efficacy, efficiency, integrity and legal compliance.
  1. Office of Labor-Management and Standards (OLMS) – The Office of Labor-Management Standards is responsible for administering and enforcing the Labor-Management Reporting and Disclosure Act (also LMRDA or the Landrum-Griffin Act), which promotes union democracy, financial integrity, and labor-management transparency in labor unions.
  1. Office of Workers' Compensation Programs (OWCP) – The Office of Workers' Compensation Programs administers four major disability compensation programs (Federal Employees Program, Energy Workers Program, Longshore Program, Black Lung Program) that provide employee benefits to workers (or dependents) who experience an occupational disease or work-related injury.
  1. Veterans' Employment and Training Service – The Veterans' Employment & Training Service helps prepare veterans for the workforce through employment resources, training programs and protection. It enforces laws like the Uniformed Services Employment and Reemployment Rights Act.
  1. Wage and Hour Division– The Wage and Hour Division protects employees by promoting and enforcing compliance with labor standards like federal minimum wage and overtime pay. It enforces laws like the Consumer Credit Protection Act (Garnishments of Wages), the Fair Labor Standards Act (FLSA), the Family and Medical Leave Act (FMLA), the Families First Coronavirus Response Act (FFCRA), and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).

Which federal laws does the Department of Labor enforce?

The Department of Labor promotes and enforces more than 180 federal laws, including all of the laws governed by the agencies listed above (and more). Although the DOL-enforced federal laws that are most relevant to you will be unique to your business, legal experts say to pay special attention to major laws like the FLSA, the FMLA, and the Worker Adjustment and Retraining Notification (WARN) Act.

According to John Gannon, partner at Skoler, Abbott & Presser, "the most important [federal laws governed by the DOL] for businesses are the Occupational Safety and Health Act, the Fair Labor Standards Act, the Family Medical and Leave Act, Executive Order 11246 (which governs those who contract with the federal government), and the Employee Retirement Income Security Act (ERISA)."

In addition to enforcing important labor and employment laws like the LMRDA and the WARN Act, Matsis-McCready said the DOL issues policy and enforces several laws that relate to the receipt of government contracts and grants, or specialty areas like agriculture, mines, construction, and transportation.

How does the DOL affect your business?

Matsis-McCready said the DOL has the power to investigate and audit businesses to ensure they are complying with the laws it is tasked with enforcing.

"Such investigatory power allows the DOL to subpoena records, come onsite and interview employees," Matsis-McCready said. "Audits can be random or initiated due to a complaint of a violation."

To ensure compliance with DOL laws, employers should conduct a self-audit every few years. This will help identify any areas in your workplace that may need to be addressed or modified.

"If your business has never conducted an employment practices audit, it's time to contact your labor and employment counsel to get started," said Gannon. "Do not wait to review your practices until after DOL shows up to conduct an investigation."

If you do become the subject of an investigation or audit, you are best served seeking legal counsel from an employment attorney.

Although the DOL can seem intimidating, it is also a great resource for employers to reference and learn from. For example, employers can easily access the federal department's website to gain insights about their legal obligations, the laws that govern them as employers, and guidance about common workplace occurrences.

How does the DOL affect employees?

The Department of Labor is an important asset for employees. It promotes and enforces laws that facilitate safe and healthy working conditions and ensure employees are being treated fairly. The DOL is can be an excellent asset for employees who believe they have been wronged by their employer in one of the areas protected by the DOL.

"Employees can file complaints with DOL when they believe an employer is violating a federal employment law within its oversight," said Gannon. "This can include suspected safety violations or failure to pay wages, such as overtime. The complaint process is relatively easy, and employees who complain are protected by strong anti-retaliation provisions."

Image Credit: Domepitipat / Getty Images
Skye Schooley
Skye Schooley,
business.com Writer
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Skye Schooley is an Arizona native, based in New York City. She received a business communication degree from Arizona State University and spent a few years traveling internationally, before finally settling down in the greater New York City area. She currently writes for business.com and Business News Daily, primarily contributing articles about business technology and the workplace, and reviewing categories such as remote PC access software, collection agencies, background check services, web hosting, reputation management services, cloud storage, and website design software and services.