On March 6, 2018, the U.S. Department of Labor announced a new program to resolve minimum wage and overtime violations under the Fair Labor Standards Act (FLSA), the federal wage and hour law. Referred to as the Payroll Audit Independent Determination (PAID) program, it is a six-month pilot initiative that allows employers to conduct self-audits of their payroll practices and voluntarily report underpayments to DOL which, in turn, will supervise back-wage payments.
A press release announcing the program said, “[t]he PAID program facilitates resolution of potential violations, without litigation, and ensures employees promptly receive the wages they are owed.” More information on the program, is available on DOL’s website.
Steps to Participate in PAID:
To participate in the program, an employer needs to do the following:
1. Identify wage and hour violations (i.e., unpaid overtime);
2. Identify impacted employees;
3. Identify the time periods of the violations;
4. Compute the back wages due each impacted employee; and
5. Complete steps outlined on DOL website and request approval from your DOL regional office to participate in the PAID program. Once approved, DOL will supervise settlement of the back wages due.
PAID a Win-Win for Employers and Employees:
PAID is a positive development for both employees and employers. DOL’s supervision of wage and hour disputes should help achieve greater employer compliance with the FLSA. PAID also offers a more efficient process for employees and former employees to resolve wage and hour disputes outside of court. An employee can refuse a back-wage payment under PAID and institute a private right of action under the FLSA. But experts predict that when offered a fair and reasonable settlement – and assurances that the employer is now in compliance with law – most employees will agree to a set dollar amount to avoid the uncertainties that come with litigation.
Self-Audit Key to Avoiding Wage and Hour Mistakes:
Even if an employer decides not to participate in PAID, it’s a good practice to routinely conduct a wage and hour audit. Small businesses should review NFIB’s Guide to Wage and Hour Laws for additional information on the FLSA. Federal wage and hour lawsuits filed nationally have increased by more than 400% since 2000. Misclassification of employees as exempt under the “white collar” exemptions, misclassification of workers as independent contractors, and failure to pay overtime are the most common wage and hour mistakes. Time spent doing an internal audit can help even the smallest employer avoid big legal headaches and costly legal settlements.
For more information on PAID or the NFIB Small Business Legal Center, contact NFIB at (800) NFIB-NOW and ask to speak with a Legal Center attorney.