In an article published in Law360 on March 22, 2018, Jim Coleman provided insight on the Department of Labor’s (DOL) recently announced Payroll Audit Independent Determination (PAID) program. This pilot program allows a six-month period for companies to self-audit on minimum wage and overtime errors under the Fair Labor Standards Act (FLSA) and then correct those errors with back wages without facing repercussions from the DOL’s Wage and Hour Division (WHD). The WHD has stated that the implementation of the program seeks to limit litigation resulting from these claims and ensure that employees receive back wages in a more timely manner.

Employers should be aware of some limitations of the program, including that companies who have already engaged in litigation or arbitration over FLSA compliance violations – or are already aware of impending litigation due to contact from an employee or former employee’s counsel – are not eligible to participate in the program. Additionally, the program is not to be used repeatedly by the same employer, and employers using the program are not granted immunity from future investigations for FLSA compliance.

The program does carry some potential risk, as employees and former employees cannot be forced to accept back wage payments and could remain free to pursue litigation if they believe FLSA violations have occurred. “Employers will want to give careful consideration to whether the benefits of the PAID program outweigh the negatives associated with having to turn themselves in to the WHD,” said Coleman. “It remains to be seen whether the WHD might use denied applications for the PAID program as a basis for selecting employers to be targeted for future investigations.”

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