On March 6, 2019, the U.S. Department of Labor’s Wage and Hour Division (“DOL”) announced it is ending the Payroll Audit Independent Determination Program (“PAID Program”), which was designed to encourage employers to self-audit for underpayment of wages and overtime. Under the PAID Program, employers could conduct an audit and self-report Fair Labor Standards Act (“FLSA”) violations. After self-reporting, if employers paid affected employees 100% of any wages owed, the DOL did not impose any penalties or liquidated damages.
The stated goal of the PAID Program was to encourage employers to self-audit and resolve potential FLSA violations quickly. According to the DOL, the first six months of the PAID Program resulted in the recovery of over $4 million in wages for 7,429 workers. By July 2020, the PAID Program netted $7 million in wages for over 11,000 workers. The DOL further reported that on average, PAID Program audits took half as long as traditional DOL audits and resulted in an average recovery four times greater than ordinary DOL audits.
On January 29, 2021, the DOL announced the immediate termination of the PAID Program. The DOL reasoned in a press release that the PAID Program “deprived workers of their rights and put employers that play by the rules at a disadvantage.” The DOL did not say how this will impact employers actively participating in the PAID Program, but indicated that employers may place a confidential call to their local DOL Wage and Hour Division for compliance assistance.
Employers with questions about the impact of this decision by the DOL or any other labor and employment law matters are encouraged to contact any of our labor & Employment attorneys.