In an effort to create a win-win solution for both employers and employees, the Department of Labor has extended its pilot compliance program, called the Payroll Audit Independent Determination (PAID). The purpose of this program is to help employees get paid for wages they have earned and to help employers correct past payroll mistakes.

Under the program, employers may self-report a wage violation to the DOL, along with a calculation of back wages owed. In exchange for an agreement by the employer to pay 100% of back wages owed over a two-year period, the DOL will supervise the settlement and issue a release of the claim, limited to the reported issue.  Short of PAID, the only two options available to release FLSA claims are through a court-approved settlement or via a DOL-initiated investigation.  While the DOL has no authority to issue releases for state law claims, it is actively working to partner with state labor officials to get their endorsement and/or cooperation with the PAID program.

Knowing that employers may remain wary of self-reporting their wage violations to the federal government, the DOL is holding a series of forums across the country to educate the public about the benefits of the program. In the first forum, held in Alpharetta Georgia on October 24, 2018, DOL representatives emphasized that the program is focused on achieving compliance with federal laws, and is not designed to present a “gotcha” opportunity to nab employers.

To interest employers in participating in the program, the DOL has explained certain aspects of the pilot program which were previously subject to uncertainty. For example, the DOL clarified it will not seek a third year of back wages, liquidated damages, or civil money penalties.  Further, the DOL will not seek a press release, and will keep the identity of the employer confidential, subject to FOIA requests. Moreover, the DOL will not investigate the underlying merits of the issue that the employer self-reports, but instead will review the back wages calculations prepared by the employer for accuracy. Once the DOL approves the calculations, it will issue the release, limited to the self-reported issue. The employer is required to pay 100% of the back wages owed to the employee(s) during the next payroll cycle and provide proof of payment to the DOL. The DOL expects the entire process from start to finish will take 90 days.           

In order to participate in the program, the employer must answer an initial screening questionnaire on the DOL website to certify that the issue it is bringing to the DOL for resolution is not the subject of ongoing litigation (which includes a pre-litigation demand letter). The employer also must review “compliance assistance materials” and certify that it has reviewed the materials. The regional DOL offices will review the employer’s submission to determine eligibility to participate in the program.

PAID presents another option for employers that have, or think they might have, FLSA wage and hour issues to resolve. As state law claims may not be subject to release and because issues range in complexity, employers are advised to seek legal counsel in evaluating their suitability to participate in the program.