U.S. Department of Labor has extended the Payroll Audit Independent Determination (PAID) pilot program for another six months. The program, which launched in March was extended through April 2019.
The PAID pilot program allows an employer to review Wage and Hour Division’s (WHD) compliance assistance materials online. Based on these materials, employers can self-audit their compensation practices for potential non-compliance. If the employer discovers any non-compliant practices, or if the employer believes its compensation practices may be lawful, but wishes to proactively resolve any potential claims, the employer can do the following:
- Specifically, identify the potential violations
- Identify which employees were affected
- Identify the time frames in which each employee was affected
- Calculate the amount of back wages the employer believes are owed to each employee
The focus of the pilot program is to encourage employers to conduct self-audits to improve their compliance with overtime and minimum wage obligations, and to ensure that more employees are paid the back wages they are owed more quickly.
Nine employers have participated in the pilot program so far, according to a report in Politico. The nine employers combined owed a total of $508,767 in back wages to employees, making them subject to violations of the Fair Labor Standards Act (FLSA).
The DOL’s selling point for the pilot program is that it will allow employers to expeditiously resolve minimum wage and overtime violations without litigation. WHD will require payment of all back wages. However, it will not require additional payment of liquidated damages or civil monetary penalties when employers choose to participate in the program and proactively work with WHD to fix and resolve the compensation practices at issue.
However, there is some concern about the risk associated with participation in the program. Attorneys general from 10 states and the District of Columbia have raised concerns to the DOL that the federal PAID program encroaches on the rights of workers under state laws. In a letter from April 2018 to the U.S. DOL, the attorneys general said that “it would be an improper federal overreach for the Department to attempt to permit employers, under the auspices of the PAID Program, to require employees to waive state law protections in exchange for the employer’s payment of overdue wages. In many jurisdictions, such waivers would not be enforceable against state law enforcement entities, yet they would mislead employees into believing that they have no further legal recourse. Please be advised that we will continue to prosecute labor violations to the fullest extent of our authority, both civilly and criminally, regardless of whether employers have participated in the PAID Program.”
In a press release, California Attorney General Xavier Becerra stated: “Californians who depend on every penny they’ve earned to feed their families and keep a roof over their heads should have a government that’s working for them, not against them…The PAID Program does the complete opposite by giving unscrupulous employers a free pass to avoid accountability for wage theft – not to mention undercutting state and local labor agencies that look out for working people. While Washington fails to protect workers, the California Department of Justice stands committed to protecting workers’ rights and enforcing the law.”
In an HR Dive article, Tammy McCutchen, principal in the Washington, D.C., office of Littler Mendelson, and a former WHD administrator, said employers should not fear the program as many states are working with the federal DOL to see to it that employees receive the wages they deserve following a self-audit. McCutchen also cited testimonials provided by some of the employers following a PAID self-audit and nothing negative has been expressed. “Employers shouldn’t fear it, it’s a way to get rid of liability much cheaper.”
More information on the PAID pilot program is available at www.dol.gov/whd/paid.