The Department of Labor’s Wage & Hour Division has announced a new pilot program expected to launch next month. This initiative, referred to as the Payroll Audit Independent Determination (PAID) program, will allow employers the opportunity to voluntarily correct employee pay and accounting errors which violate the requirements of the Fair Labor Standards Act (FLSA). Though an official launch date has not been announced, the program is set to run for an initial 6 months and is open to all FLSA-covered employers who have not already been sued and/or who are not currently being audited by the Department of Labor (DOL). Eligible employers may enroll online shortly after the launch date (see “How to Enroll” below) and participate in the PAID program through the end of the pilot.
There are several potential Benefits of enrolling in the PAID program:
- May prevent lawsuits by providing employers with a mechanism to obtain an agreeable DOL settlement for affected employees as required by FLSA.
- Provides incentive for companies to ensure that they are paying employees correctly, in accordance with the requirements of FLSA.
- Eliminates the potential for liquidated damages (“double” damages) against participating employers since they will be acting in good faith by voluntarily coming forward and reporting their mistakes.
- Employees can receive back pay under the program, eliminating litigation costs for employees and employers.
- Participation in the program may also remedy state wage & hour law violations (dependent on the State’s statute of limitations).
Items employers should consider when evaluating participation in PAID:
- Short window of opportunity to enroll in the program – expected launch is April 2018 and it is unknown if the program will run beyond the anticipated 6-month window.
- This is not a “get out of jail free” card for employers. Employers need to make sure they’re in compliance even in the absence of the PAID program.
- Employees will not be required to accept settlements with which they disagree. In lieu of participating in the program, employees may file a lawsuit in hopes of receiving back pay, liquidated damages, and recouping attorney’s fees.
- Participation in the program could open the door to a broader DOL investigation (unlikely, but certainly possible.)
- Participation in the program may uncover potential violations of state wage and hour laws; thus, employers should check to see if the applicable statute of limitations in all states in which they have employees is longer than the 2-year SOL provided under FLSA.
- If employees agree to a DOL-supervised settlement, employers are not immune from STATE law wage claims for periods prior to the FLSA's SOL. State law claims will have to be resolved through a State agency and additional money may need to be paid to resolve those claims not covered under the federal PAID program.
- Some program details are unclear - Will employers have to pay back pay for a two-year period (the regular FLSA SOL) or a three-year period (the limitations period for willful violations)?
How to enroll in the PAID program:
Interested employers should subscribe to the Department of Labor’s WHD Key News Alerts to be notified of PAID’s official launch date and to receive program updates via email. Click here to subscribe.
Additional Information on PAID may be obtained here:PAID – United States Department of Labor
Employers who are interested in learning more about PAID and/or their obligations under the FLSA should contact Redstone GCI’s experienced consultants. We can review your policies and procedures and discuss risk considerations, to assist you in determining whether participation in the PAID program would be beneficial to your company. Visit our website at www.redstonegci.com to learn more about our services.