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Nationwide PAID Program Seeks to Expedite Resolution of Overtime, Minimum Wage Violations

Compliance
Article
03/19/2018
  • The U.S. Department of Labor Wage and Hour Division's (WHD) new Payroll Audit Independent Determination (PAID) program can help employers resolve potential overtime and minimum wage violations.
  • The program aims to resolve claims quickly, without litigation; improve employers' compliance with overtime and minimum wage obligations; and ensure that more employees promptly receive back wages owed.
  • WHD will implement this pilot program nationwide for approximately six months, evaluate its effectiveness and determine next steps.

Program aims to help expedite resolution of overtime, minimum wage violations

The Department of Labor's (DOL's) Wage and Hour Division (WHD) has established a new nationwide pilot initiative called the Payroll Audit Independent Determination (PAID) program. It aims to help expedite resolutions of overtime and minimum wage violations under the Fair Labor Standards Act (FLSA) without litigation. All FLSA-covered employers are eligible to participate in the pilot.

The PAID program encourages employers to review their employee pay practices and correct those that may have led to violations under the FLSA.

The program's primary objectives are to:

  • Resolve such claims expeditiously and without litigation;
  • Improve employers' compliance with overtime and minimum wage obligations; and
  • Ensure that more employees promptly receive the back wages they are owed.

WHD will implement this pilot program nationwide for approximately six months, evaluate its effectiveness, and determine next steps.

DOL believes the PAID program can benefit both employers and employees

The DOL has posted Questions and Answers about the PAID program on its website to provide details about the program, including restrictions. The program covers potential violations of the FLSA's overtime and minimum wage requirements. These might include abuses based on alleged "off-the-clock" work, failures to pay overtime at the legally mandated rate of pay, or misclassification of employees as exempt from the FLSA's minimum wage and overtime requirements.

The PAID program can benefit employers by allowing them to swiftly resolve unintentional minimum-wage and overtime violations without litigation or additional payments for liquidated damages or civil monetary penalties. The WHD will however require businesses to pay all back wages due when employers participate in the program and work with WHD to resolve the compensation practices at issue.

Employees can benefit from the PAID initiative because it may help to ensure that more individuals promptly receive the back wages they are owed. Impacted workers would get 100 percent of the wages due without litigation expenses or attorneys' fees in approved cases.

The program requires employers to review WHD's compliance assistance materials, carefully audit their pay practices, and agree to correct the pay practices at issue. These requirements may improve employers' future compliance with minimum wage and overtime obligations and strengthen workers' rights.

How employers can participate in the PAID program

To participate in the program, employers must:

  • Review the requisite PAID program information and compliance assistance materials, all of which will be available at www.dol.gov/whd/paid/.
  • Audit their compensation practices for potential noncompliance. If an employer discovers any problems, or believes its compensation practices may be lawful but wants to proactively resolve any potential claims anyway, the business must:
    • Identify the potential violations,
    • Identify which employees were affected;
    • Identify the timeframes in which each employee was affected; and
    • Calculate the amount of back wages owed to each employee.

After assembling this information, the employer then contacts WHD to discuss the issues for which it seeks resolution. Unless the division denies the employer's request to participate in the program at the outset, it will then tell the employer how it must submit required information, including:

  • The calculations described above, along with evidence and explanation about how the calculations were made;
  • A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
  • Certification that the employer reviewed all information, terms, and compliance assistance materials;
  • Certification that the employer is not litigating the noted compensation practices in court, arbitration or otherwise, and has not received any communication from an employee's representative or counsel expressing interest in litigating or settling those issues; and
  • Certification that the employer will adjust its practices to avoid the same potential violations in the future.

WHD will then evaluate the information and contact the business to discuss next steps, including the collection of any other necessary information. If back wages are due to an employee or employees, the employer must pay them in full by the end of the next full pay period after receiving the summary of unpaid wages, and promptly provide WHD with proof of that payment. Employers are cautioned that the program does not require employees to accept the payment of back wages due should they prefer to pursue litigation or arbitration. And, employers are prohibited from retaliating against employees for a choice to refuse the payment as well.

Employers are prohibited from initiating the process under the PAID program to resolve any issues for which the WHD is already investigating the employer or which the employer is already litigating in court, arbitration or otherwise or where the employee’s representative or legal counsel has already communicated an interest in litigating or settling the issue. Employers are also reminded that the WHD does not waive its right to conduct any future investigation of the employer following the resolution of an issue under the PAID program. Additional restrictions also apply.

Keep in touch with WHD for updates on the PAID program

The DOL encourages businesses to sign up for WHD Key News Alerts to learn when the PAID program will launch and other forthcoming details about the program.

Tammy Tyler

Tammy Tyler is a senior compliance analyst with a focus on employment law at Paychex, Inc., a leading provider of integrated solutions for payroll, HR, retirement, and insurance services.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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