Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The U.S. Department of Labor (DOL) has announced the immediate termination of its Payroll Audit Independent Determination (PAID) program. The PAID program began in March 2018 as a pilot program to allow employers an alternative method to rectify overtime and minimum wage violations of the Fair Labor Standards Act (FLSA) without the worry of an extended statute of limitations, penalties, and threat of private litigation or attorneys’ fees. The Wage Hour Division has repeatedly touted the program’s success. Although after a successful trial period the program was extended indefinitely in October 2018, the DOL abruptly ended the self-reporting program on January 29, 2021.
In its press release announcing the end of the program, the DOL indicated that the resources and outreach provided by the Wage and Hour Division to employers are sufficient to help employers comply with the FLSA “without relieving them of their legal obligations.”
Under the PAID program, employers were able to 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. In turn, the DOL would supervise and approve the settlement permitting employees to issue a valid release of the claim, limited to the reported issue. The DOL agreed not to seek a third year of back wages, liquidated damages, or civil money penalties, and kept the identity of reporting employers confidential, subject to FOIA requests. As an additional incentive for employers to participate in the PAID program, the DOL agreed not to investigate the underlying merits of the issue that the employer self-reported; instead, its review was limited to the back wage calculations prepared by the employer for accuracy.
Without the self-reporting PAID program, the only two options available to release FLSA claims are through a court-approved settlement or as a result of a DOL-initiated investigation. While the PAID program did not release any state law claims, it allowed for significant relief for employers to correct issues without the threat of additional litigation or negative publicity. It is not clear whether employers currently working with the DOL through the PAID program will be allowed the benefits of the program.
Even without the added benefits of the PAID program, employers should continue to be proactive to audit pay records and correct potential wage issues if identified.