Recently, the Biden Administration reversed another program put in place by the Trump Administration.  This time it abolished a self-audit program for employers to identify potential violations of labor laws regarding wage and overtime compensation. The program also included a process for expedited resolution of the violations that, if followed, would cut off employees’ rights to bring private actions seeking redress for the violations.

In an earlier blog post, P&A discussed the Department of Labor’s (DOL) Payroll Audit Independent Determination (PAID) program. The PAID program was a self-audit program that sought to more quickly resolve employer violations of the Fair Labor Standard Act (FLSA) with regard to minimum wages and overtime. Under the PAID program, employers conducted a self-audit of their compensation practices for potential violations in the last two years. If the employer discovered a potential violation, it would provide information on the potential violation to DOL’s Wage and Hour Division (WHD), who would advise the employer on how to submit information on the violation.

Employers who participated in the PAID program could avoid litigation and civil monetary penalties for the violations if the employer worked with WHD to fix and resolve their non-compliant compensation practices. In addition, affected workers were prohibited from taking any private action based on the identified violations.

The PAID program, which began in March 2018, was initially scheduled to operate for six months. WHD extended the program indefinitely in October 2018. However, on January 29, 2021, WHD announced that it was ending the program immediately. In the press release, Jessica Looman, WHD Principal Deputy Administrator, was quoted as saying, “Workers are entitled to every penny they have earned” and “the Payroll Audit Independent Determination program deprived workers of their rights, and put employers that play by the rules at a disadvantage.”

With the ending of the PAID program, employers with FLSA violations are subject to payment of back wages and liquidated damages to employees. If WHD determines that the violation is repeated or willful, employers may also be assessed civil money penalties. In addition, employees have the right to bring legal action against employers for back wages and damages. Therefore, employers should continue to comply with the FLSA and seek to resolve any potential violations.

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