Seyfarth Synopsis: The U.S. Department of Labor has announced the launch of the Payroll Audit Independent Determination program—or “PAID”— to facilitate the resolution of overtime and minimum wage claims under the FLSA without litigation. New York Attorney General Eric T. Schneiderman recently called PAID “nothing more than a Get Out of Jail Free card for predatory employers,” and said his office “will continue to prosecute labor violations to the fullest extent of the law, regardless of whether employers choose to participate in the PAID Program.”

As we previously reported, the U.S. Department of Labor has announced the launch of the Payroll Audit Independent Determination program—or “PAID”— to facilitate the resolution of overtime and minimum wage claims under the FLSA without litigation. Employers that avail themselves of PAID will still have to make payment of all back wages due under the FLSA, but the DOL “will not require additional payment of liquidated damages or civil monetary penalties when employers choose to participate in the program and proactively work with WHD to fix and resolve the compensation practices at issue.”

While PAID looks like welcome news to those employers seeking to resolve wage and hour disputes before being sued, New York employers may wish to curb their enthusiasm. Attorney General Eric T. Schneiderman recently called PAID “nothing more than a Get Out of Jail Free card for predatory employers,” and said his office “will continue to prosecute labor violations to the fullest extent of the law, regardless of whether employers choose to participate in the PAID Program.”

Given that, under the PAID program or otherwise, the U.S. DOL “may not supervise payments or provide releases for state law violations,” Schneiderman’s comments have little substantive significance. However, his comments may cause employers, especially those in New York, to think twice before availing themselves of PAID out of fear of putting themselves on the radar of aggressive state and local government enforcement agencies. The agency Schneiderman supervises, the New York Attorney General’s Labor Bureau, has a long track record of active enforcement of Labor Law violations in the state.

PAID remains a pilot program that will operate for the next six months, at which point the U.S. DOL will evaluate its effectiveness and decide whether to make it permanent. The DOL has scheduled a webinar for April 10, 2018 to explain “how the PAID program works, determining eligibility for the program, and how to participate in PAID.” For now, the decision whether to use PAID is not as easy or straightforward as it may seem. While employers may view it as a way to do the right thing and move forward with compliant wage-payment practices, officials in New York State may not be impressed.