Earlier this year, the U.S. Department of Labor through its Wage and Hour Division (the “Division”) announced a new pilot program to expedite resolution of inadvertent overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”). The program allows employers to self-report potential violations, reducing the time, money and resources spent to address these claims.

The stated goals of the Payroll Audit Independent Determination (“PAID”) program include making employers more aware of and compliant with their obligations under the FLSA and helping employees receive the back wages which they are owed in a more expedited and less expensive fashion.

The program requires voluntary self-reporting by employers who uncover violations that have not yet been the subject of a claim. The benefit to employers is that by self-reporting, employers can avoid being subject to the imposition of liquidated damages, as well as payment of the employee’s attorney’s fees for inadvertent violations which they discover before a claim is filed against them. Under the FLSA liquidated damages, if awarded, are in an amount equal to the amount of the wage award meaning the employee receives “double damages.” Employers will, however, be required to pay 100% percent of the back wages deemed due for the violations that they seek to resolve under the program. Once a claim has been filed against an employer or the Division determines that the employer is acting in bad faith, the employer will not be permitted to participate in the program and will be relegated to litigation and subject to the potential imposition of liquidated damages and attorney’s fees.

The results of the self-reporting by employers will be that employees will receive the money which they are owed more quickly without needing to engage in litigation and hire an attorney. Employees are not required to accept any settlement which they find objectionable. The benefit to the Department of Labor is that the Division should be able to resolve more unpaid overtime and minimum wage FLSA claims in a much faster time frame permitting them to utilize resources to focus on repeat offenders or other employers who refuse to self-report.

The Division has already implemented the program and has indicated that it intends to reevaluate the same after six (6) months, at which time it will determine whether continuing the program is worthwhile.

For employers, the pilot program offers another incentive to proactively audit their payroll practices and self-report in the event potential violations are found.

If you have any questions regarding how this new program impacts you or your business please contact one of our business attorneys for a consultation.