DOL Announces Voluntary PAID Program to Resolve FLSA Violations

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The U.S. Department of Labor announced its Payroll Audit Independent Determination pilot program, by which employers may proactively resolve potential violations of the minimum wage and overtime provisions of the Fair Labor Standards Act. News of the program has been received with some skepticism, however.

Under the program, employers may conduct a self-audit of pay practices. (Employers currently under investigation or complaint are not eligible for the program). If an employer discovers potential minimum wage or overtime violations, it may then contact the DOL to participate in the PAID program. The employer would provide certain information regarding the pay violations to the DOL, which would then calculate the back wages owed. The DOL would provide form settlement agreements for distribution to the affected employees, along with the calculated payments.

According to the DOL, the benefit of the program is the expeditious resolution of claims without litigation and increased compliance with overtime and minimum wage obligations. The business community, however, has questions about the possible detrimental effects.

For example, the employer would be inviting the DOL to review admitted violations – and only “inadvertent” violations are protected by the program. There is no guarantee that the DOL would deem these violations to be inadvertent, and it could possibly expand the scope of an investigation beyond the self-disclosed issues.

Moreover, there is nothing that requires the employee to accept the proffered backpay. Employees could, in fact, file their own lawsuits and seek additional compensation permitted under the FLSA beyond the backpay.

In addition, the program only addresses FLSA violations, and not those under state wage laws. Conceivably, an employee could accept the payments under this program yet still be free to seek additional relief under state laws.

Whether there is an actual benefit to employers from participating in the program appears to be an issue that is yet to be resolved. We caution employers to consult with counsel before jumping into the program. More information about the program is available from the DOL’s webpage.