DOL Extends PAID Pilot Program

Allen Smith, J.D. By Allen Smith, J.D. October 9, 2018
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​The U.S. Department of Labor (DOL) announced a six-month extension of its Payroll Audit Independent Determination (PAID) program on Oct. 9. Under the program, employers may cooperate with the DOL to voluntarily correct errors they discover that violate the Fair Labor Standards Act (FLSA).

The pilot program, which launched earlier this year, was originally slated to last for six months. It has been well received by employers and employees alike, according to DOL testimonials about it. But some state attorneys general have raised concerns about the program. We've gathered articles from SHRM Online and other trusted media outlets on the PAID program.

The Society for Human Resource Management (SHRM) "welcomes DOL's efforts to incentivize employers to review wage practices and provide compliance assistance. Programs like PAID provide a bridge between government regulators and the workplace," said Nancy Hammer, SHRM's vice president, regulatory affairs and judicial counsel.

Employers Encouraged to Self-Audit

When the PAID program was first launched, employer wage and hour attorneys called the PAID program a "huge opportunity" to voluntarily correct errors. Tammy McCutchen, an attorney with Littler in Washington, D.C., and former administrator of the DOL's Wage and Hour Division, noted that the DOL's approximately 900 investigators can't uncover all of the wage and hour violations at the nation's millions of workplaces. "If you care about employees and want to ensure more employees are paid in compliance with the FLSA, you can't get there through enforcement only," she said.

(SHRM Online)

Speedy Resolutions

Litigation of FLSA issues can take years, resulting in costs for employers and delays in recovery for successful plaintiffs. Despite the PAID program being a speedier way for workers to get the money they are owed, Judy Conti, the government affairs director for the National Employment Law Project, opposed the program, saying that it only results in employees getting the wages they weren't paid. The program could "lull workers into believing that they got all the relief they're entitled to," she said.

(Bloomberg)

[SHRM members-only toolkit: Complying with U.S. Wage and Hour Laws and Wage Payment Laws]

10 Attorneys General Oppose Program

Ten state attorneys general—from California, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, New York, Pennsylvania and Washington—wrote Secretary of Labor Alexander Acosta objecting to the PAID program's lack of liquidated damages (a legal term meaning double damages) and interest or back pay. But a DOL official said that more states have supported the program than opposed it.

(Business Management Daily)

Limits on Program Participation

The PAID program places certain limits on which employers may participate. For example, the employer must be covered by the FLSA. The practices at issue must not have been held unlawful in the past five years and the employer can't be involved in any litigation asserting claims involving the same compensation practices. Nor can the practices be under investigation by the DOL for the employer to be eligible to participate. In addition, the employer may not have previously participated in the PAID program to resolve FLSA violations from the same pay practices.

(Jackson Lewis)

State Law Claims

Despite the attractiveness of the PAID program at resolving FLSA claims, some wage and hour attorneys have voiced concern that it leaves employers vulnerable to lawsuits under state law. In addition, they have noted that affected employees may opt not to participate in the DOL settlement and instead seek back pay, liquidated damages and attorney fees in court. However, a DOL official said response thus far has been "overwhelmingly positive."

(Proskauer)

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