Employers Will No Longer Get PAID
On January 29, 2020, the U.S. Department of Labor (DOL) announced that it was abandoning the Payroll Audit Independent Determination (PAID) program, effective immediately. PAID was introduced in 2018 as a self-audit program, designed to allow an employer who uncovered potential Fair Labor Standards Act (FLSA) wage violations to voluntarily report those findings to the Wage Hour Division (WHD), which would work with the employer to pay any wages due to employees without the additional risk of the penalties or liquidated damages the WHD might impose if it had initiated the audit.
While the intent of the PAID program was to resolve potential wage and hour claims more expediently, and presumably with less financial cost to employers, historically many employers have become wary of proactively contacting a federal agency with the admission of an error. Moreover, under the program employees were not obligated to accept the proposed settlement terms simply because the WHD had endorsed them. In addition, employers could not use the PAID program to resolve issues that already were being investigated by the WHD, that were the subject of litigation or arbitration (whether actual or threatened), or about which the employer already had been contacted by an employee’s attorney or other representative to settle. Notably, shortly after the program was announced, the attorneys general of a number of states formally voiced their objections to the program, concerned that it would subvert the actions of state agencies enforced with wage laws that often provide greater potential relief than found under the FLSA.
While the DOL’s announcement did not provide an explanation for the decision to end the program, it may signal the current administration’s return to a greater focus on agency-initiated audits and enforcement through litigation.