The Wage and Hour Division (WHD) of the US Department of Labor recently announced a new nationwide pilot program, the Payroll Audit Independent Determination (PAID) program, for potential resolution of overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The WHD advertises the program in part as offering a way for employers to resolve wage and hour claims expeditiously and without litigation. However, we are concerned about serious risks for employers considering this program, and strongly advise employers who are considering entering the program to discuss this option fully with their legal counsel.
WHD will implement this pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the program, as well as potential modifications to the program, to determine its next steps. FLSA-covered employers are eligible to participate in the pilot.
The program is not available to employers under investigation by the WHD for wage and hour violations. Participation in the program is voluntary. The program in part involves an employer self-audit, with cooperation between the employer and the WHD in identifying violations and back wages due. The WHD will allow employees the option of accepting back pay due and signing a limited waiver. However, employees are not obligated to accept the settlement terms. This could leave the employer, who has identified violations to both the WHD and its employees, open to litigation from the employees.