What Should Small Business Owners Should Know About Administrative Inspections

Date: September 20, 2017

Administrative inspections are quite common, and an inevitable reality for small business owners in virtually every industry. Typically, a government agency will seek to inspect your business premises only to ensure that you are compliant with relevant health and safety standards, or will seek to inspect your business records and or interview employees only as part of an audit to ensure full compliance with relevant labor and employment laws. In some cases, an inspection may be completely random, but in other cases an inspection may follow a triggering event (i.e., a workplace accident, or an environmental incident), or a complaint from an aggrieved employee, job applicant or a consumer.

You Have the Right to Insist Upon Seeing a Warrant

In most cases an agency will be acting perfectly within the law in seeking to inspect your worksite or business records; however, that does not mean that you are without rights. Even where an agency is statutorily authorized to perform an inspection, the Fourth Amendment of the U.S. Constitution protects against unreasonable searches and seizures—which means that, if the government seeks to collect information on your property, you have a right to insist upon seeing a warrant. And a recent Supreme Court decision, Patel v. Los Angeles, confirmed that this right extends to businesses operating in heavily regulated fields—subject only to narrow exceptions where there is a compelling justification to bypass the warrant procedure.

In almost all routine administrative inspections, the business owner or manager has a right to refuse access or prohibit investigatory activities absent a warrant. But keep in mind that an administrative law judge can issue a warrant in a matter of hours. Still, this may buy enough time for a consultation with an attorney. Additionally, the warrant procedure generally helps ensure that an agency complies proscribed formalities.

You Have a Right to Refuse to Answer Potentially Incriminating Questions

The Fifth Amendment guarantees your right to refuse to answer any question that may potentially be incriminating. While most of us think about police interrogations when we think about the Fifth Amendment right against self-incrimination, the reality is that anything you say to government officials—even in a civil investigation—may potentially be used against you in a subsequent criminal prosecution. And be aware that federal criminal statutes often incorporate administrative regulations by reference, meaning that in some cases an obscure regulatory violation may give rise to criminal liability as well.

It’s a good idea to insist upon speaking with legal counsel before answering questions. Even where you believe that you are 100% in compliance, it can’t hurt to ask for time to consult an attorney before submitting to an interview. And often state or federal agents will honor reasonable requests to reschedule an inspection—though usually only for a few days.

NFIB Offers Special Guidance on OSHA Inspections

Often we hear from members who are dealing with Occupational Safety & Health Administration inspections. To help, review NFIB’s guidance for dealing with OSHA. NFIB’s OSHA guidance highly recommends working closely with legal counsel if an inspection has been prompted by a death or a major accident. Also, while you have a right to insist upon seeing an administrative inspection warrant, our OSHA guidance notes that insisting on a warrant may potentially prompt OSHA to pursue a warrant to inspect parts of your business that it might not have intended to inspect originally. So there are risks with asserting your rights and reason why you should consult with an attorney as soon as you receive notice of an impending inspection.

*This article does not provide legal advice. Employers are advised to retain counsel from a trusted attorney with experience in employment law.

Related Content: Legal - Compliance | Regulations

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