We recently reported on the implementation of the United States Department of Labor’s Wage and Hour Division’s (WHD) new nationwide pilot program, the Payroll Audit Independent Determination (PAID) program. As previously discussed, under the PAID program employers are encouraged to self-report overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The WHD will then work with the employer to resolve the claims without litigation.
The WHD has now issued further guidance on the PAID program, directing employers to their website to find the compliance assistance materials and resources needed. In addition, the WHD has indicated that when determining eligibility, an employer must certify that the following is true:
- You are an employer covered by the FLSA.
- The employees included in your proposed PAID self-audit are not subject to prevailing wage requirements under the H-1B, H-2B, or H-2A Visa Programs, the Davis Bacon Act or Related Acts, the Service Contract Act, or any Executive Order. .
- Neither WHD nor a court of law has found within the last five years that you have violated FLSA minimum wage and/or overtime requirements by engaging in the same compensation practices at issue in this proposed PAID self-audit. .
- You are not currently a party to any litigation (private or with WHD) asserting that the compensation practices at issue in this proposed PAID self-audit violate FLSA minimum wage and/or overtime requirements. .
- WHD is not currently investigating the compensation practices at issue in this proposed PAID self-audit.
- You are not specifically aware of any recent complaints by your employees or their representatives to you or your representatives, to WHD, or to a state wage enforcement agency asserting that the compensation practices at issue in this proposed PAID self-audit violate FLSA minimum wage and/or overtime requirements. .
- You have not previously participated in the PAID program to resolve potential FLSA minimum wage or overtime violations resulting from the compensation practices at issue in this proposed PAID self-audit. .
- You have a continuing duty to update WHD on any changes to the above information and/or representations. .
Once eligibility is determined, the DOL requires that employers review the compliance assistance materials about the FLSA through the online portal. After the review is complete, the system will generate a Certificate of Completion which must be presented to the WHD with the other required documentation.
According to the DOL, the next step is for the employer to conduct a self-audit of the business’ compensation practices. Employers must provide the WHD with the following information:
- The names, addresses, and phone numbers of all affected employees; .
- Your back wage calculations along with supporting evidence and methodology used to make those calculations; .
- Payroll records and any other relevant evidence; .
- Records demonstrating hours of work of each affected employee during the time frame at issue; .
- Records to show that you have corrected the compensation practices to comply with the FLSA;
- A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
- A certification that the employer reviewed all of the PAID program’s information, terms, and compliance assistance materials; and.
- A certification that the employer meets all eligibility criteria of the PAID program.
The WHD will then evaluate this information and if WHD accepts the employer into PAID, WHD will provide the proposed scope of the release of liability for the potential violations presented.
Importantly, the DOL notes that if an employer pays back wages to employees before WHD reviews and assesses the back wages owed, “those employees will not have waived their rights to pursue a private lawsuit for these potential violations under the FLSA because WHD did not supervise the settlement of these back wages.”
We will continue to monitor the PAID program and will update you on any developments.