On March 6, 2018, the Department of Labor (“DOL”) implemented a six-month trial program through which employers may self-audit their current pay-roll practices for the purposes of unearthing instances of misfeasance or policies which contravene DOL guidelines and Fair Labor Standards Act (FLSA) regulations. Through this new program, dubbed the Payroll Audit Independent Determination Program, (“PAID”), employers who are uncertain about the possibility of existing violations may conduct an independent self-audit and report the findings to the DOL. The advantage of conducting such an audit lies in the DOL’s pledge to allow employers to pay back lost wages for a lookback period of two years, without penalty.
Under the PAID program, the DOL will oversee the payment of backpay by employers to employees. Payment by the employer of backpay under the PAID program is treated as a settlement of claims by the DOL. However, this program does not limit an employee’s ability to reject the payment and initiate litigation. The PAID program does not apply to employers who are (1) currently being audited by the DOL; (2) already in litigation; or (3) threatened with litigation regarding overtime violations. Overall, this program is structured to encourage self-policing and reporting without fear of reprisal or protracted litigation.
Employers who are concerned about potential violations of the FLSA and overtime obligations, should contact knowledgeable counsel to learn more about the DOL’s PAID program.
This article was written by Nezar Habhab, Law Clerk.
