Department of Labor to Pilot Self-Reporting Wage Violation Program

The Department of Labor's Wage and Hour Division (WHD) has announced a new program that seeks to improve the often lengthy and difficult resolution process following an employer's violation of the Fair Labor Standards Act (FLSA). The new program, called the Payroll Audit Independent Determination (PAID), is set to begin a six-month pilot period designed to encourage employers to participate in self-audits of their pay practices and to bring violations they find to the WHD. The program is specifically tailored to reduce the necessity of litigation to resolve violations of wage regulations, to increase compliance with overtime and minimum wage rules, as well as to increase the likelihood of employees receiving the wages they are owed on an expedited basis. The WHD will oversee this new program and work side-by-side with employers who choose to participate in order to correct any violations that may have occurred, and ensure that workers receive their back wages. After the six-month pilot period, the program will be evaluated by the Department of Labor (DOL) to determine its efficacy.

The program seeks to benefit both employers and employees with new proactive compliance assistance as opposed to reactive enforcement measures. Both parties can avoid an often lengthy litigation process that results in high legal fees and other related costs. The program will have an additional benefit to employers as they will no longer be subject to liquidated damages. On the other side of the table, employees will no longer face protracted and often costly litigation. Additionally, the DOL anticipates that it will use only a fraction of the resources it normally dedicates to resolving FLSA violation cases with the new self-compliance measures.

Generally, all employers subject to the FLSA are eligible to take advantage of the PAID program. Employers that are not acting in good faith or are already under investigation for wage violations, however, will not be eligible to participate in the PAID program. In addition, an employer that is already in the midst of litigation, in court, arbitration, or otherwise, is not eligible to participate in PAID, and employers who have been notified by an employee's representative of an interest in litigating or settling a wage issue are also ineligible. The WHD will closely monitor the program in order to ensure only eligible employers participate.

The DOL has included additional safeguards for employees in its new program. While employers who participate will be required to return 100 percent of back wages to their employees by the end of the next full pay period following the issuance by WHD of a summary of unpaid wages, employees are not obligated to accept settlements that they are not satisfied with.

The PAID program will allow employers to be proactive and get out in front of any wage violations they may discover. Under current law, employers may feel as though litigation is their only option. The PAID program provides an attractive and viable alternative. Proactive compliance can potentially eliminate significant issues in an otherwise complex field. The effective date of the PAID program has not yet been announced, so please continue to read our law alerts to remain up-to-date. If you have any questions, please feel free to contact David Gabor, head of The Wagner Law Group's employment law department.