What's Happening?
The U.S. Department of Labor has reinstated the Payroll Audit Independent Determination (PAID) program, which allows employers to voluntarily disclose potential wage-and-hour violations. This initiative,
reopened in July, now includes violations under the Fair Labor Standards Act (FLSA) and certain Family and Medical Leave Act (FMLA) violations. The program aims to expedite the recovery of back wages for employees while providing employers a mechanism to resolve issues without litigation. During its initial run, PAID facilitated the recovery of approximately $11 million in back wages. However, participation is restricted; employers under investigation or involved in ongoing litigation cannot participate, and the Department of Labor may reject applications. Employees are not obligated to accept settlements offered through PAID, and early payments do not preclude their right to pursue private litigation.
Why It's Important?
The relaunch of the PAID program is significant for both employers and employees in the U.S. labor market. For employers, it offers a chance to rectify payroll and FMLA errors without the burden of lengthy court proceedings, potentially saving time and resources. This program also provides a structured path for employers to address compliance issues proactively. For employees, the program promises quicker access to owed wages and remedies. However, there are concerns about the program's limitations, such as the potential exposure to state-law claims and the possibility that applying could highlight existing issues. The program's expansion to include FMLA violations underscores the Department of Labor's commitment to ensuring compliance with labor laws and protecting employee rights.
What's Next?
Employers considering participation in the PAID program should evaluate their eligibility and the potential benefits and risks. Human resources and compliance teams may need to reassess their internal audit processes and legal strategies to align with the program's requirements. The Department of Labor will continue to oversee the program, ensuring that it facilitates fair and efficient resolution of wage-and-hour disputes. As the program progresses, it may influence broader labor policy discussions and encourage more employers to adopt proactive compliance measures.
