Common Labor & Industries Wage Audit Issues for Small Business Owners in Washington State

Avoid the traps many Washington State business owners find during wage and labor audits by the Washington State Department of Labor & Industries:

1) Construction companies without a main storage space/yard work to qualify for “Permanent Yard or Shop” under WAC 296-17A-5206-79. L&I in Washington will only allow workers to be reported for this lower payment if the shop is for storage and maintenance only. Auditors will look for a shop that combines functions in one storage space and ding the employer for a higher risk classification for all employees.

2) Construction or other types of manufacturing companies where office staff share space with storage materials or a workshop space. L&I auditors will watch for office staff in a shared space without a wall between office employees and a workshop or a storage space, and if there is no physical wall the business owner will have to pay a higher wage rate classification for office staff.

3) Office staff who are sent to purchase supplies for a business that are not strictly office supplies. Auditors in Washington’s L&I Department will ding employers for any office staffer who is used to buy materials that are not strictly office supplies under WAC 296-17A-4904.

4) Business owners who work without any employees on a job site. Business owners are normally exempt. However, if  L&I auditors find a business owner working alone on a job site as a laborer without any other employees present, they will require that the hours spent on the job site be reported as if the business owner were a worker.

Feel free to call Washington Business Advocates if you have any questions about your wage audit, or if an investigator has started to ask questions about your business: 206-747-3029.

Tips to defend yourself in an audit by the Washington State Department of Labor & Industries (LNI):

You will not always need a lawyer. Most audits can be handled by the business owner and staff. Here are some general tips that we have found helpful in our ten years of negotiating with state and federal agencies.

1) Ask questions - If something seems a little off, you might find that a Washington State Department of Labor & Industries investigator may not have understood something you said. State employees are over-worked. You may have been quite clear, but they forgot, or there was a mistake in the notes from a previous auditor - anything can happen. It’s always better to ask a question rather than try to tell the auditor what you think. Avoid any sort of conflict if you can (it's not always easy).

2) Don't ask for a state employee’s supervisor - A supervisor in any agency in Washington State will almost never intervene favorably for a business owner against their staff. You're more likely to end up with a larger fine for your business as the audit investigator puts even more effort into justifying the original complaint.

3) Look up the rules yourself - It's worth the time to check all the information you're given. If the auditor wants to use a higher-fee category for your employees, look up the definition. If an auditor counts a company as a "subcontractor," check to see if the company has its own LNI account (you don't have to report any workers paid under another account). You can find a lot of information online on risk classifications, general safety and health standards, and anything else connected to your industrial insurance account with the Washington State Department of Labor & Industries.

4) Take your time - The state can be slow-moving and that is really frustrating. But in administrative law, bad news is generally pretty fast, while good news travels slowly. Let things play out. Be patient, even when it's hard. A slower process is almost always more favorable to the business owner.  

Feel free to call Washington Business Advocates if you have any questions about your wage audit, or if an investigator has started to ask questions about your business: 206-747-3029.