“DOL’s New PAID Program Offers Employers Incentives, But May Not Outweigh the Risks,” Daily Business Review
In a Daily Business Review article published in March 27, 2018, Alicia Koepke provided insight on the Department of Labor’s new payroll audit independent determination (PAID) program, and what employers should know when considering whether to participate. The pilot program allows for companies to self-audit for minimum wage and overtime errors under the Fair Labor Standards Act (FLSA) and, when errors are identified, 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. Additionally, the WHD will not require payment of liquidated damages or civil monetary penalties by employers participating in the program.
Employers should be aware of some limitations of the program, including that the employer only obtains advantages if the impacted employee accepts the back wages. If an employee is alerted to the violation and chooses not to accept the wages and instead bring a suit against the company, the employer has potentially increased the risk of litigation. Companies who have already engaged in litigation or arbitration over FLSA compliance violations, or who 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 employers, and self-reporting employers can still be investigated for FLSA compliance in the future.
“The degree to which these risks may be realized cannot be fully determined until the DOL issues specific and final guidance and documents for the PAID program,” said Koepke. “Given the risks associated with FLSA violations and the PAID program, employers should consult employment counsel to assess any potential FLSA violations prior to participating in the PAID program.”
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