Pilot program aims at resolving wage violations faster, cheaper

Department of Labor

Earlier this month, the U.S. Department of Labor announced it was rolling out a six-month pilot program designed to help employers resolve wage violations faster and cheaper and without the time, hassle or expense of litigation.

In a business Q&A with The Oklahoman, labor and employment attorney Phil Bruce explained that under the Payroll Audit Independent Determination (PAID) program, employers who discover potential wage and hour violations – such as a failure to pay for “off-the-clock” work or a failure to correctly calculate overtime pay at the rate of 1.5 times the regular rate of pay – can request participation in the program. If accepted, the DOL then reviews the results of the self-audit, calculates the amount of back wages due, issues a settlement form, and then supervises payment to the affected employees in exchange for a legal release of liability claims.

“The primary benefit for employers is that they potentially can avoid the time, hassle and expense of defending a federal wage and hour claim in court,” said Bruce. “Another benefit is that the DOL will not assess liquidated damages — that is, double damages — or civil money penalties if it allows an employer to participate in PAID. In short, PAID potentially can allow employers to resolve federal wage violations faster and for less money, all while ending up with a valid release.”

While disclosing violations of the Fair Labor Standards Act in exchange for a valid release of claims sounds inviting, Bruce warned that employers should proceed with caution, noting that any request to participate in PAID is a request to have the DOL audit the company’s records.

“Wage and hour issues are notoriously technical, and any employer facing potential violations should seek counsel to explore all options, including PAID,” concluded Bruce.