(Updated 4/12/2018)

Last month, the DOL announced the Payroll Audit Independent Determination program (“PAID”), a self-auditing program designed to encourage employers to uncover and voluntarily report potential minimum wage and overtime violations and avoid the risk of penalties or liquidated damages that would be imposed if the Agency discovered the violations in the first instance.  We initially discussed the PAID program here.

This week, the WHD formally began the six month (or so) trial program and posted additional guidance, including a “Q & A” section, regarding the program on the DOL’s website, to provide further detail as the circumstances under which the program is (and is not) available and, presumably, to ease concerns that employers, who are contemplating participation in the program, might have.  Specifically, the WHD identifies the following eligibility requirements as to any proposed PAID self-audit:

  • The employer is covered by the FLSA;
  • The employees at issue are not subject to prevailing wage requirements under the H-1B, H-2B, or H-2A Visa programs; the Davis Bacon Act or related acts; the Service Contract Act; or any Executive Order;
  • Neither the WHD nor a court of law has found within the past 5 five years that the employer has violated the minimum wage or overtime requirements of the FLSA by engaging in the same compensation practices at issue;
  • The employer is not currently a party to any litigation (private or with the WHD) asserting claims involving the same compensation practices;
  • The WHD is not currently investigating the compensation practices at issue;
  • The employer is not specifically aware of any recent complaints by its employees or their representatives to the employer, the WHD or a state wage enforcement agency asserting FLSA violations of the compensation practices at issue; and
  • The employer has not previously participated in the PAID program to resolve potential FLSA violations from the same compensation practices.

In addition, DOL states that absent evidence of health or safety concerns (e.g. potential child labor violations), if it declines an employer’s request to participate in the program it will not use that request as a basis for a subsequent investigation.  But DOL acknowledged that PAID self-audit requests will be subject to Freedom of Information Act (FOIA) requests, which could result in unwanted publicity for and/or additional litigation against employers.

The guidance does not address potential parallel claims under state law, over which the DOL has no jurisdiction and, as Acting WHD Administrator Bryan Jarrett reiterated during a DOL-sponsored webinar on April 10th, the PAID program does not currently cover other potential claims (e.g. FMLA claims) regulated by the Agency.  The concern as to how, if at all, the PAID program would alleviate possible liability for parallel state law claims was underscored last week when New York Attorney General Eric Schneiderman announced that his office will continue to investigate such claims and seek full remedies under state law, regardless of whether an employer has separately participated in the PAID program.  Deriding the program as a form of amnesty, Schneiderman referred to it as “nothing more than a Get Out of Jail Free card for predatory employers.”  This week, in a letter to Secretary of Labor Alexander Acosta, Schneiderman was joined by the Attorneys General of nine other states and the District of Columbia, who likewise questioned the “troubling” nature of a program that allows employers in effect to obtain an “interest-free loan” without penalty by simply paying wages that it already owed to employees.  Moreover, expressed the Attorneys General, employers might be able to obtain global settlement agreements that encompass state law claims, even though resolution of those claims was not supervised by the DOL and even though the employer might, unbeknownst to it, be under a state investigation at the time.  This is particularly problematic, noted the Attorneys General, because many state wage and hour laws provide protections and remedies for employees greater than those available under the FLSA.

Jackson Lewis will continue to monitor the PAID program during its trial period and, to the extent possible, evaluate its efficacy as a beneficial employer alternative to potential wage and hour claims and Agency-initiated audits.  If you have any questions about this or any other wage and hour issue, please consult the Jackson Lewis attorney(s) with whom you regularly work.

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Photo of Richard I. Greenberg Richard I. Greenberg

Richard Greenberg, a Principal in New York City office of Jackson Lewis P.C., is admitted to the bar of the State of New York and the Federal District Court for the Southern District of New York. Mr. Greenberg graduated from Cornell University’s…

Richard Greenberg, a Principal in New York City office of Jackson Lewis P.C., is admitted to the bar of the State of New York and the Federal District Court for the Southern District of New York. Mr. Greenberg graduated from Cornell University’s School of Industrial and Labor Relations in 1992 and earned a Juris Doctor degree from Brooklyn Law School in 1995.

He advises both unionized and union-free clients on a full-range of labor and employee relations matters. With respect to traditional labor matters, Mr. Greenberg represents clients in collective bargaining negotiations, labor disputes, grievances and arbitrations, proceedings before the National Labor Relations Board, and in state and federal court. Mr. Greenberg also advises clients on the legal aspects of remaining union-free. With respect to employee relations matters, Mr. Greenberg has extensive experience assisting clients in numerous industries with the development and maintenance of personnel policies and personnel infrastructures. In this regard, Mr. Greenberg often works on these issues with clients as business needs and culture change as a result of business transactions, such as mergers and acquisitions.

Mr. Greenberg regularly advises clients on compliance with the myriad of federal and state employment laws, including the FMLA, FLSA, ADA, ADEA and WARN, as well as new legal developments impacting labor and employment policies and practices.