DOL PAID Program Announced – A Way Out for Non-Compliant Employers? - American Society of Employers - Michael Burns

DOL PAID Program Announced – A Way Out for Non-Compliant Employers?

Last week the U.S. Department of Labor (DOL) announced the rollout of a “new” pilot program called the Payroll Audit Independent Determination (PAID) program. This program offers employers a process to self-report wage and hour violations with the DOL to clear them up without being exposed to as many potential damages and monetary penalties. 


However, as a compliance avenue, this is not really new. Since the 1950’s the DOL has supervised settlements between employers and employees under Section 16(c) of the Fair Labor Standards Act (FLSA). Even the waiver of liquidated damages and penalties has been “on the books” since then. 

Under the PAID program the employer could self-audit for non-compliant compensation practices. If a non-complaint pay practice is discovered that exposes the employer to expensive agency and court liabilities, the employer could contact the DOL’s Wage and Hour Division to review and discuss the non-compliance. Under the PAID program the Wage and Hour Division would assess the situation and determine what unpaid wages would have to be repaid. If agreed to, this program would also avoid legal expenses on both sides.

Is it really a good deal though? On one hand perhaps, but this program does not completely insulate an employer from all liabilities. The Wage and Hour Division has the right under this program to accept what the employer states as the extent of the error or it can levy its own determination that the employer is expected to accept and execute by the next pay period.

The law firm Proskauer’s Andrew Smith and Allan Bloom point out a number of potholes in this program employers need to be aware of.

First, if your state has a longer statute of limitations than the FLSA, this federal program will not protect you from a claim brought in state Court. Second, if the non-compliance affects more than one employee each of them have to agree to participate in the program and release and waive their rights.  Otherwise, they may sue separately. Further, if employees sued not knowing your firm was initiating participation in the program with settlement, those lawsuits will not go away. Third, future investigations of the employer are not waived. Employers are not permitted to repeatedly resolve the same violation. Fourth, this program is not available to resolve issues already being investigated by the Wage and Hour Division.

One other concern of importance is bringing your violations forward to a government agency that is charged with investigation and remedy. Proskauer points out that it may be preferable to deal with claims privately as they arise and while the statute of limitations on those claims continues to tick away.

This pilot program will be tested for six months by the DOL and then re-evaluated for effectiveness. As with all offers that may be to good to be true, look them over carefully before taking them.

Sources:  Proskauer Law & the Workplace Week in Review - 03/12/2018 DOL’s “New” PAID Self-Reporting Program of Questionable Value to Employers  Allan Bloom and Andrew Smith.; CCH Answers Now Pilot program will test employer self-reporting and payment of FLSA wage violations — FEDERAL NEWS,(Mar. 8, 2018); U.S. Department of Labor Announces Self-Audit Program Wage & Hour Law Update Jackson Lewis PC (3/7/2018


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