During President Trump’s first term, the administration implemented a program to encourage employers to identify compliance issues under the federal wage and hour laws and the Family Medical Leave Act (FMLA). The program is back.
The Wage and Hour Division (WHD) has reinstated the Payroll Audit Independent Determination (PAID) program as a tool to assist employers in resolving potential compliance concerns related to federal minimum wage and overtime and the FMLA. According to WHD, “this program allows employers to correct mistakes efficiently and ensure employees receive back wages or other remedies promptly, all while avoiding litigation.”
Th PAID program contemplates the following:
- Employer Self-Audit– Employer conducts a self-audit to identify the potential violations, employees affected, and timeframes each employee was affected. The employer is responsible for calculating the amount of back wages owed to each employee, if applicable; and specify any other remedies that are necessary for compliance.
- Report to WHD— Employer contacts WHD to discuss its findings, back wage calculations, remedies, supporting evidence, and methodology. Employers must also submit a statement of the scope of the potential violations for inclusion in a release of liability, and certification that the employer reviewed and meets all the program’s requirements.
- WHD Review— WHD evaluates the submission and provides guidance on next steps.
- Resolution & Payment or Other Remedies— Employer pays back wages and/or other remedies within 15 days of receiving the summary of unpaid wages, and provides proof of payment and documentation to WHD.
Bottom Line
Under the right circumstances, the PAID program could be deployed to proactively address known compliance issues and very well may be worthy of serious consideration. However, there are a number of other factors an employer should consider before taking the plunge into the PAID program, including for example, risks of third-party litigation and the scope and efficacy of releases of legal claims. A skilled advisor can worth through all of these issues so that the employer can make an informed decision about participation.