Best practices for employers facing wage and hour audits in Washington

The Washington State Employment Security Department (ESD) audits employers’ records to confirm wages and hours are accurately reported and ensure they comply with the state’s unemployment insurance laws and rules. To learn more about the policies and best practices you should follow to be ready for an audit, read on.

How ESD audits work

The U.S. Department of Labor (DOL) requires the ESD to conduct annual compliance audits, and employers are selected based on whether they (1) have a pattern of inconsistent reporting, (2) operate in an industry with historically high levels of noncompliance, (3) transferred ownership or reclassified the business type, (4) are the subject of any citizen-submitted fraud reports, or (5) were randomly selected by a computer (about 10 percent of total audits). Notably, being selected for an audit does not mean you have violated any laws or rules.

The ESD auditors will contact the selected employers by phone, e-mail, or letter to notify them about the pending audit, identify the records to be inspected, and set a mutually agreeable date, location, and time to conduct the audit. Additionally, the agency will send an appointment confirmation letter, a pre-audit questionnaire, and a required records checklist to be completed.