The Department of Labor announced a six-month pilot program designed to allow employers to self-audit and self-report accidental violations of the Fair Labor Standards Act.
Named the Payroll Audit Independent Determination (PAID) program, it is intended to expedite resolution of minimum wage and overtime violations while sparing employers costly litigation.
Under the PAID program, employers can self-audit their compensation practices for compliance with the FLSA. If the audit reveals a violation, employers must identify possible violations and who are the affected employees.
Employers also are expected to calculate the amount of back wages owed to each employee, report the results to the Labor Department, and agree not to repeat the violations.
Employers who are not eligible to participate in the program include those currently under active audit and litigation, or threats of litigation, or who have a history of violations.
“While the program may not be advantageous for all businesses, it does signal a significant change in the federal government’s approach, as this Administration promised to focus on compliance rather than enforcement,” observes Gina M. Ameci, an attorney with the law firm of Buchanan Ingersoll & Rooney PC.
Previously, employers who uncovered FLSA mistakes corrected them at their peril, she notes, because of a real threat of liability for double damages and civil penalties, without assurance of release of the FLSA claims from the government.
Under the PAID program, DOL will provide a form for employees who receive payment to waive their FLSA rights for the violations corrected.
Employees can choose not to accept payment or waive their rights, but it is not expected that many employees will do so. If the employees agree, DOL will approve the resolution and not seek double the amount due or any penalties.
