As we blogged earlier this year, in March 2018, the United States Department of Labor (DOL) announced a new program, referred to as PAID (or, Payroll Audit Independent Determination), under which employers may voluntarily apply for DOL assistance in resolving potential claims for wage underpayment under the federal Fair Labor Standards Act (FLSA).  As previously discussed in our blog post, this pilot program will last six months, during which time the DOL will analyze how well the program meets the DOL’s desired goals, which include seeking to resolve wage claims faster, more thoroughly, and more cost effectively. 

The DOL began accepting applications for the program on April 3, 2018.  Also on that date, the DOL posted additional details on its website about the program.  Some of the key points are:

  • The application process begins on the DOL website and requires employers to first participate in an on-line review of FLSA compliance materials. To gain access to these materials, employers must provide identifying information, including company name.
  • The DOL states that applicants not accepted into the program will not become subject to DOL investigation as a result of the information provided in the application unless there is a “health or safety risk.”
  • The DOL anticipates applicants will have a final claims determination within 90 days. Any employees to whom the DOL determines back wages are due must be paid by the end of the employer’s next pay period following the determination.
  • Any back wages owed to former employees that cannot be located will be sent to the United States Treasury.
  • Employers who participate in PAID but choose to privately resolve any related wage claims outside of the DOL process will not be able to obtain effective waivers of those employee’s FLSA claims, as such waivers require DOL approval.
  • Employers cannot resolve state wage claims simultaneously through PAID but may seek to resolve those claims separately with each employee.
  • Records pertaining to the PAID program, including applications and resolution documents, are not confidential and may be subject to the same Freedom of Information Act requests (and defenses) as other DOL investigation documentation.

Despite these clarifications, many employers are understandably wary about participating in the PAID program.  As we mentioned previously, employees are not required to accept wage payments offered by employers through the PAID program, and may instead choose to pursue their federal claims in court, and thereby seek additional financial remedies.  Employers also are concerned that notification to employees of past federal wage law violations may trigger mirrored claims against them under applicable state laws, which may have longer statutes of limitations than the FLSA’s two-year or three-year filing periods (e.g., state wage claims in New York and California, respectively, have six-year and four-year limitations periods).  In any event, employers are advised to consult with legal counsel before engaging in an internal wage audit, which will help ensure the audit’s accuracy, legality, as well as allow employers to seek privileged legal advice on these issues.