Employers will have an opportunity to resolve potential wage and hour violations without litigation under a new pilot program announced by the U.S. Department of Labor.  The “Payroll Audit Independent Determination” (PAID) program will pilot for six months to encourage compliance with the Fair Labor Standards Act’s requirements that employees be paid minimum wage on all hours worked and overtime when they work more than forty hours in a workweek.  Possible minimum wage and overtime violations that may come up include those based on “off-the-clock” work, failing to pay for overtime hours at a time and a half rate, and misclassification -related issues. 

The DOL’s Wage and Hour Division established the program to enable employers that have found potentially non-compliant practices to self-report and resolve them without the risk of penalties, liquidated damages, or litigation costs and attorney’s fees.  It will also give affected employees the opportunity to receive back wages owed without having to endure costly and protracted litigation. 

Any employer will be able to self-report and seek to participate in the PAID program to resolve inadvertent violations of FLSA.  This may be a good option for employers who want to ensure a valid and enforceable waiver of FLSA rights by affected employees under Section 216 of the Act.

While any employer will be able to apply to participate in the PAID program, some may be denied where they are already in litigation or under a DOL investigation for the pay practices at issue.  They may also be denied where they seek to use PAID to repeatedly resolve the same potential violations instead of implementing corrections after those violations are first identified.  It remains to be seen if those employers who see to participate in PAID and are denied will face subsequent DOL investigations or other consequences.  

The resolution of any potential violations brought under the PAID program will be overseen by the DOL’s Wage and Hour Division.  Settlements will be limited in scope to the potential violations at issue, and the DOL will assess the amount of wages due and supervise their payment to the affected employee(s).  

More information on the pilot program is available at the DOL’s website.