DOL Launches Payroll Audit Independent Determination (PAID) Program To Promote Self-Reporting And Early Resolution Of Wage And Hour Claims

Author:Ms Tammy McCutchen, Lisa A. Schreter and Meredith L. Schramm-Strosser
Profession:Littler Mendelson

On March 6, 2018, the U.S Department of Labor's Wage and Hour Division announced its new Payroll Audit Independent Determination (PAID) program. Initially being rolled out as a six-month pilot program, PAID provides employers with a unique opportunity—and indeed, motivation—to proactively address potential wage and hour underpayments under the Fair Labor Standards Act (FLSA) while simultaneously helping to protect themselves against litigation threats from the DOL and individual employees. While the details of the PAID program are yet to be announced, the DOL has announced the basic outline. 

All FLSA-covered employers are eligible to participate in the program to seek the early resolution of potential wage and hour violations.  The program cannot be utilized to resolve an already-existing litigation or administrative enforcement, or a known threat of litigation/enforcement action (e.g., claims identified in a demand letter).  Employers with a history of repeat violations are not currently eligible to participate.  

The employer must start by conducting a thorough self-audit of its pay practices to determine if any potential violation exists.  At the conclusion of the audit, the employer can choose to contact the DOL and request participation in the program.  Unless the DOL denies the employer's request to participate,1 the DOL will then require the employer to submit specific information regarding the alleged violation: the specific type (e.g., misclassification, failure to pay overtime), the specific employees affected, the specific duration of the violation, and the amount of back wages owed.  The employer is also required to provide several certifications to the DOL including, but not limited to, certifications about its audit practices and a certification that it will adjust its pay practices going forward to avoid the same potential violations in the future.

At the conclusion of the review process, the employer is obligated to pay in full (100%) the wages owed to the employees.2 The employer must pay these wages no later than the next regularly scheduled pay period that occurs after it receives the final determination from the DOL of the summary of unpaid wages.  In return for this payment, and certification of future...

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