For employers who discover inadvertent overtime and minimum wage violations under the Fair Labor Standards Act (FLSA), the Wage and Hour Division (WHD) of the U.S. Department of Labor has a new pilot program to expedite resolution without litigation.
The stated purpose of the new Payroll Audit Independent Determination (PAID) program is
“to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed — faster.”
Similar to the IRS’ Voluntary Classification Settlement Program for employers that had misclassified employees as independent contractors, PAID provides a “safe harbor” to employers who discover inadvertent FLSA violations.
On the PAID website, employers can find the resources they need to participate, including the relevant FLSA compliance materials. The materials provide the information they need to conduct an audit of their operations.
If any potential claims arise that the employer wants to resolve, they must then:
- Identify the specific potential violations
- Specify the employees that were affected
- Identify the time frames in which each employee was affected
- Calculate the amount of back wages owed to each employee
Next, the employer should contact the WHD, which will deliver instructions for submitting the required information. This may include:
- Back wage calculations, along with supporting documentation
- A concise explanation of the scope of the potential violations
- A certification that the employer reviewed all of the PAID program’s information, terms, and compliance assistance materials
- A certification that the employer meets all eligibility criteria of the PAID program
After evaluating this information, the WHD will contact the employer regarding next steps, including the collection of additional information if needed. Employers will be required to issue payment of owed funds by the end of the next full pay period after receiving the summary of unpaid wages and must provide proof of timely payment to WHD.
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