This week, the U.S. Department of Labor announced the return of the Payroll Audit Independent Determination (PAID) program. PAID is a voluntary compliance initiative that helps employers resolve inadvertent violations of the Fair Labor Standards Act (FLSA)—such as unpaid overtime or minimum wage—without litigation or civil monetary penalties. Today’s announcement extended the reach of PAID to violations under the Family and Medical Leave Act (FMLA).
Why an employer might use PAID
Avoid Litigation and Penalties:
Employers can resolve FLSA and FMLA violations without facing lawsuits, civil money penalties, or liquidated damages (which can often double the owed back wages).
Voluntary Self-Correction:
The program is designed for employers who discover and want to fix unintentional compliance issues proactively, showing good faith.
Speedy Resolution:
PAID offers a streamlined process that allows quicker restitution to employees compared to protracted investigations or litigation.
Maintain Good Reputations:
Participating in PAID may be viewed more favorably by employees and regulators than being forced into compliance through enforcement.
Wage Clarity and Training:
o The DOL provides compliance assistance and encourages employers to adopt better pay practices moving forward.
Important considerations
- Employers cannot use PAIDif they are already under investigation or involved in wage litigation.
- Employers must pay all back wages in full.
- Workers must voluntarily acceptthe back pay and release only those specific claims addressed by PAID. The division will ask employees to waive the liquidated damages, otherwise available under the FLSA, but the employee is under no obligation to do so and may choose instead to file a private lawsuit.
Practical Considerations:
PAID is not for every employer but its return creates an opportunity for employers to review their FMLA/FLSA policies and practices to ensure compliance. It may be a terrific opportunity to avoid costly litigation or enforcement action.
David T. Barton is an attorney in Fennemore’s Employment & Labor practice group. Barton focuses his practice on representing employers in matters involving discrimination, harassment, wrongful termination, and wage and hour disputes, offering strategic counsel on compliance, risk management, and litigation defense. He provides comprehensive representation to clients navigating complex employment and benefits-related legal issues.
