Getting PAID – A New Path for Employers to Address Federal Wage and Hour Violations

From Employee Benefit News: 

It is a dilemma that many employers have faced. You discover that your company violated federal law on minimum wage or overtime payments. You want to fix the problem, but you do not know how to do so without prompting employee demand letters, a Department of Labor audit or, perhaps worst, a class action lawsuit. The Department of Labor’s Wage and Hour Division (WHD) has set out to provide employers a way to quickly resolve these issues and avoid litigation…potentially.

The WHD recently announced a new nationwide pilot program called the Payroll Audit Independent Determination (PAID) program. This new program aims to facilitate timely resolution of potential overtime and minimum wage violations under federal law without litigation and to improve employers’ compliance with wage and hour laws.

While full details of the PAID program have yet to be rolled out, the basic premise is as follows:

• employer reviews WHD compliance materials;
• employer conducts an audit of its compensation practices and identifies non-compliant policies or potential claims it would like to proactively resolve;
• employer calculates the amount of back wages it believes are owed to affected employees;
• employer contacts WHD and submits its calculations and all required documents. These include, among other items, an explanation of the scope of the potential violations and a certification that the employer is not litigating the compensation practices at issue in court, arbitration, or otherwise;
• WHD evaluates the information and confirms the back wages;
• WHD issues a summary of unpaid wages and forms describing the settlement terms for each employee, which employees may sign to receive payment; and
• employer issues prompt payment.

A chief benefit of the PAID program is that employers who self-report and cooperate with WHD to remedy violations will not be required to pay liquidated damages or civil monetary penalties. They will also avoid the costs of litigation for all employees who accept the payment and sign a release. ...