On March 6, 2018, the Wage and Hour Division (WHD) of the U.S. Department of Labor has announced that it will soon launch a new pilot program called the Payroll Audit Independent Determination (PAID) program. PAID provides a framework for employers to proactively resolve potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). Please see the press release.

Under the PAID program, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to come forward. Employers that self-report may work in good faith with the Wage and Hour Division to correct their mistakes and provide due compensation to their employees in an expedited manner.

The program’s primary objectives are to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed – faster. Employees will receive 100% of the back wages paid without having to pay any litigation expenses, attorneys’ fees, or other costs.

Employers that voluntarily self-report and work with the Department in good faith to take corrective action under the PAID program will not be subject to liquidated damages or civil monetary penalties as a condition to finalize settlements. Without exception, employers that participate in the program will be required to pay 100 percent of the back wages due for the violations they seek to resolve.

WHD will implement this self-audit pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the pilot program, potential modifications to the program, and whether to make the program permanent.

The decision to participate in the PAID program is an important one that should be discussed with legal counsel.