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Dept. of Labor’s new PAID program a win-win-win for employers, taxpayers, employees

by Bryan Jarrett, opinion contributor - 03/06/18 10:40 AM ET

Since Congress first passed overtime and minimum wage laws 80 years ago, our nation’s wage laws have become more complicated, and violations have occurred in virtually every industry.

The Department of Labor, through its Wage and Hour Division, enforces these laws to benefit employees and create a level playing field for employers. The Department also proactively educates employers to prevent violations.

{mosads}At times, employers may be the first to uncover violations of overtime or minimum wage laws. Many employers prefer to correct their mistakes and voluntarily pay their employees the wages they are owed. Our current laws, however, preclude employers from simply paying the wages due to conclusively settle overtime or minimum wage violations. Fearing full-scale federal investigations or costly litigation, employers may choose to not address the violations at all — resulting in losses to employees, employers, and taxpayers.

We owe it to our nation’s workforce to help employees get these wages.

Today, the Department of Labor announces a new pilot program: the Payroll Audit Independent Determination (PAID) program. The PAID program will ensure that more employees receive the wages they are owed faster — without having to wait for court cases to resolve and potentially lengthy investigations to conclude.

Under the PAID program, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to come forward. Employers that self-report may work in good faith with the Wage and Hour Division to correct their mistakes and provide due compensation to their employees in an expedited manner.

The Department’s Wage and Hour Division will oversee the PAID program and, in each case, will evaluate the amount of wages due and supervise employers’ payments to employees. Employees will receive 100 percent of the back wages paid, without having to pay litigation expenses, attorneys’ fees, or other costs. They will also receive their back wages quickly — unlike in litigation, which can take years.

The PAID program will include safeguards to protect employees and prevent abuse of the program. For instance, employers may not participate in the program if the Wage and Hour Division determines they are acting in bad faith or under investigation for the violations at issue. And self-reporting is a requirement to participate — the PAID program is not available to settle ongoing lawsuits.

Moreover, repeat violators cannot use the PAID program to resolve recurring violations. Finally, settlements will be limited to the violations that employers self-report, and employees will not be required to accept settlements if they disagree with them.

The primary goals of the PAID program are identifying and correcting non-compliant practices so employees receive 100 percent of their back wages due. To that end, the PAID program will require employers to review their pay practices, accept compliance assistance, and correct the practices that led to the errors.

Employers that voluntarily self-report and work with the Department in good faith to take corrective action under the PAID program will not be subject to liquidated damages as a condition to finalize settlements. Without exception, employers that participate in the program will be required to pay 100 percent of the back wages due for the violations they seek to resolve.

Under the PAID program, the Wage and Hour Division expects that many more employers will self-report and, as a result, that many more employees will be paid more quickly.

The Wage and Hour Division expects that each PAID case will require a fraction of the resources and time it otherwise takes to resolve cases, freeing the Division’s resources to focus on bad actors and otherwise help America’s workforce.

The Wage and Hour Division will implement the PAID pilot program nationwide for approximately six months, after which it will carefully evaluate the program and consider future options. The Division encourages employers to audit their compensation practices and consider participating in the PAID program. This will be a win for employees, a win for employers, and a win for taxpayers.