On March 6, 2018, the Wage and Hour Division of the U.S. Department of Labor (DOL) announced that it will soon launch a nationwide pilot program for employers to self-report potential overtime and minimum wage violations. The pilot program is called the Payroll Audit Independent Determination (PAID) program. The primary objective of PAID, according to the agency, is to “improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.” Many details are not yet available, but the DOL has announced the broad outlines of the program, which are available here: https://www.dol.gov/whd/paid/#1

All employers covered by the Fair Labor Standards Act (FLSA) are eligible to participate to resolve potential issues, but the program may not be utilized to resolve issues subject to current investigations by DOL, active litigation, or claims where there is a known threat of litigation. Employers who are interested in participating would begin the process by reviewing DOL’s compliance assistance materials, and then conducting a self-audit of payroll practices. After conducting the self-audit, employers would have the option of submitting the audit results to the agency to request participation in the program, and, if the application to participate is approved, DOL will require the employer to provide additional information and certifications to DOL, including an agreement to correct the pay practices at issue moving forward and pay affected employees back wages. In return, Employers who participate would not be required to pay liquidated damages or civil monetary penalties, and, if payment is accepted by the affected employees, employers will also receive a limited waiver of claims. The waiver of claims appears to be very narrow, and would not result in a waiver of state law claims or a waiver of claims under statutes other than the FLSA. The PAID program is slated to begin in April, 2018, and DOL has stated that it will evaluate the program after six months.

Many details of the program remain unknown, including how far back employers must look to determine whether violations occurred, what criteria DOL will use for approving participation in the program, and the form of the limited waiver of claims. Because program participation requires employers to provide information to the agency, employers should proceed with this program cautiously, and only with the advice of counsel. Even with these questions, PAID appears to be structured in a way that may provide a viable option for employers who are concerned about resolving potential violations of the FLSA.