The United States Department of Labor, Wage and Hour Division (“WHD”) has announced a nationwide pilot program, The Payroll Audit Independent Determination (PAID) program (the “Program”), to facilitate self-correction of potential overtime and minimum wage violations under the Fair Labor Standards Act (“FLSA”).
The Program’s primary objective is to allow employers to self-correct potential FLSA violations. The WHD will require payment of all back wages within one payroll period of the Program’s summary of unpaid wages, but the WHD will not require additional payment of liquidated damages or civil monetary penalties when employers proactively work with WHD to fix and resolve the compensation practices.
As part of the Program, employers will be required to audit their compensation practices for non-compliant practices and then:
- specifically identify the potential violations,
- identify which employees were affected,
- identify the timeframes in which each employee was affected, and
- calculate the amount of back wages the employer believes each employee is owed.
Since the Program is new and many issues must be evaluated before it is utilized, employers should seek the guidance of experienced labor and employment counsel to assist with the self-correction process. Certainly, for employers with problematic payroll practices, this may prove to be a viable option to resolve otherwise difficult problems.
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