In 2018, the U.S. Department of Labor began allowing employers to self-report wage and hour violations under the Fair Labor Standards Act (FLSA) and pay 100% of the wages owed to workers. In exchange, DOL would not assess liquidated damages, which would otherwise equal 100% of the wages. Plus, the employer would be immunized from private lawsuits.
It was all part of the Payroll Audit Independent Determination (PAID) program.
Now PAID is DEAD!
On Friday, the DOL made the news official (here). Check out these quotes from the DOL in the press release:
- “Workers are entitled to every penny they have earned.”
- “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage. The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.”
Just as Dan Schwartz predicted during The Employer Handbook Zoom Office Hour on Friday, administrative agencies like the DOL will be more focused on litigating claims against employers rather than resolving them.
Is ending the PAID Program penny wise and pound foolish?
Sure, some cynics might call the PAID Program a get-out-of-jail-free card for villain employers to avoid their FLSA obligations.
But, the real scofflaws — the repeat offenders — weren’t eligible to participate in the PAID Program and probably wouldn’t anyway.
The PAID Program was intended for well-intentioned, first-time-offender employers that:
- made a mistake;
- self-identified the problem;
- agreed to work with the DOL in good faith to correct it; and
- paid 100% of the back wages.
Consider that, as of July 2020, the DOL confirmed that it had recovered more than $7 million in back wages for more than 11,000 workers, with compliance actions under PAID finding more back wages for workers in less time. Through the end of the 2019 fiscal year, PAID actions found, on average, more than four times the back wages of traditional full investigations and more than 10 times the back wages per WHD staff hour invested.
The DOL is bearing its teeth. So, if anything, now is the time to double down on good wage-and-hour hygiene.
- Audit your pay practices.
- Confirm that employees are properly classified as exempt versus non-exempt (or employee versus independent contractor).
- Ensure that non-exempt employees receive minimum wage and properly-calculated overtime when they work more than 40 hours in a workweek.
Otherwise, don’t expect the DOL or an employee-rights attorney to give any quarter if/when there are any FLSA violations.