Recently, the Department of Labor introduced a new voluntary pilot program – the Payroll Audit Independent Determination (PAID) program. The pilot program is a self-audit program that seeks to more quickly resolve employer violations of the Fair Labor Standard Act (FLSA) with regard to minimum wages and overtime. The pilot program is expected to last for six months after which WHD will evaluate its effectiveness.
Under the PAID program, employers conduct a self-audit of their compensation practices for potential violations in the last two years. If the employer discovers potential violations, it then identifies the affected employees, the timeframes in which each employee was affected, and the amount of back pay owned each employee. Once that information is collected, the employer reaches out to the DOL Wage and Hour Division (WHD) who will advise the employer on how to submit information on the violation. The employer will have to provide WHD with:
- The names, addresses, and phone numbers of all affected employees;
- The back pay calculations, the supporting evidence, and the methodology used to make those calculations;
- Payroll records and any other relevant evidence;
- Records demonstrating hours of work of each affected employee during the time frame at issue;
- Records to show that the employer has corrected its compensation practices to comply with the FLSA;
- A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
- A certification that the employer reviewed all of the PAID program’s information, terms, and compliance assistance materials; and
- A certification that the employer meets all eligibility criteria of the PAID program.
WHD will review the information and verify the back pay due the affected employees. Once the amount of back pay is finally determined, the employer must pay the affected employees by the end of the next full pay period and provide proof of payment to WHD.
Employers who participate in the PAID program will not be required to pay liquidated damages or civil monetary penalties for the violations if the employer works with WHD to fix and resolve their non-compliant compensation practices.
The PAID program is limited to FLSA minimum wage and overtime violations. It does not cover any Service Contract Act or Davis-Bacon Act violations. For more information on the PAID program, see https://www.dol.gov/whd/paid/.
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