Apr 09, 2018

U.S. Department of Labor "Paid" Program

By: Allison Mann

Compliance with wage and hour laws is complicated and riddled with potential pitfalls. The unwary employer may inadvertently run afoul of said laws. Even the most well-intentioned employer may commit a violation. It is oftentimes difficult to determine how to respond, and how to remedy that violation once it has been discovered.

On March 7, 2018, the Department of Labor introduced a new program it says will allow employers a new path for coming into compliance with the law after independently discovering a violation. It is called the Payroll Audit Independent Determination (PAID) Program. Essentially, it provides an employer the ability to self-report FLSA violations and work with the Department of Labor towards resolution of the violation without a full investigation or litigation.

The PAID Program is premised on qualified employers completing self-assessments to ensure compliance with wage and hour laws. Then, if any violation is identified by the employer, it can self-report the violation to the Department. Specific information is required at the time of the report, and the Department is given the opportunity to require submission of additional information. After evaluation, the Department determines the monetary consequences of the violation and supervises payment by the employer to the employee. The employee may then release its claims against the employer (though it is not required).

The main benefit of the Program, according to the Department, is that it saves all parties involved time and money. Further, the Department states that it will not impose fines and liquidated damages penalties on employers who participate in the Program in good faith.

Not all employers will qualify to participate. There are several requirements which all must be met. One of the main requirements is it must be a true self-report. An employer will not qualify for the Program if the employee reports the issue, or if an investigation or litigation is already commenced.

There are still open questions with regard to how the process will work. How long will it take? How extensive will the Department’s review of employer records actually be? What happens if the employer disagrees with the Department’s conclusions? Will there be a chance to appeal? Will an employee still be able to bring state law claims against its employer? This is only a pilot program, which will run for six months. The Department of Labor then plans to evaluate the Program and consider its options to move forward.

Certain commentators have already described the program as a win for employers, employees, and taxpayers. However, it may still be too early to determine the actual effect of the program. Only time will tell if the PAID Program will provide employers with a less adversarial and more expeditious tool to remedy FLSA violations.

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Reprinted with permission from an article submitted for publication in the April, 2018 Southwest Area Human Resource Association newsletter.