The U.S. Department of Labor (DOL) has announced an immediate end to its Payroll Audit Independent Determination (PAID) program. In 2018, DOL’s Wage and Hour Division (WHD) launched the PAID program. Generally, PAID allowed employers to self-report federal minimum wage and overtime violations under the Fair Labor Standards Act (FLSA). The self-reporting aspect allowed employers to avoid litigation, penalties, or damages. Affected workers, however, could not take any private action on the identified violations.
Background of the PAID Program
Previously, under the PAID program, employers were able to do the following:
- self-report a wage violation;
- submit a calculation of back wages to the DOL; and
- enter into an agreement to pay 100% of back wages owed over a two-year period.
Accordingly, the DOL would supervise and approve the settlement permitting employees to issue a valid release of the claim. The claim, however, could only address the reported issue. The DOL agreed not to seek a third year of back wages, liquidated damages, or civil money penalties. The agency also kept the identity of reporting employers confidential, subject to requests under the Freedom of Information Act. Furthermore, as additional incentive for employers to participate, the DOL agreed not to investigate the underlying merits of the issue. Instead, its review only included any back-wage calculations prepared by the employer for accuracy.
The PAID program was originally scheduled as a six-month pilot program beginning March 2018. The program was eventually extended, however, and ended up lasting the duration of the Donald Trump presidency.
Explanation of PAID’s Demise
In a January 29th, 2021, press release, the WHD’s Principal Deputy Administrator Jessica Looman stated the following:
“Workers [should receive] every penny they have earned. The [PAID] program deprived workers of their rights and put employers that play by the rules at a disadvantage. The U.S. Department of Labor will rigorously enforce the law, and . . . will use all the enforcement tools we have available.”
The press release mentioned above also announced that the DOL was providing significant outreach and educational resources for employers. These resources will help employers comply with wage and hour laws, without relieving them of their legal obligations. The resources will also ensure that workers understand their rights.
Employer Takeaways
On the whole, the suspension of the PAID program should be a signal to employers of things to come. The Biden administration seems committed to taking wage and hour violations seriously and holding violators responsible. Employers should call a Wage and Hour Division office in their area for any FLSA compliance questions or assistance.