The pilot program is aimed at increasing employer FLSA compliance and speeding up payment of back wages to employees.
The U.S. Department of Labor announced last Tuesday that the Wage and Hour Division (WHD) is initiating a new six-month pilot program to encourage companies to proactively work with the WHD to resolve overtime and minimum wage violations under the Fair Labor Standards Act.
The Payroll Audit Independent Determination (PAID) program is designed to ensure that employees receive wages owed more quickly than they would through more traditional litigation or administrative actions.
What does this mean for employers?
Employers are encouraged to audit their pay policies and voluntarily report any overtime and minimum wage violations to WHD. Settlements under the PAID program will be limited to the violations that employers self-report, so participating employers should be ready to cooperate fully.
The WHD promises program participants that it will not impose fines or penalties to encourage settlements. Employers that are already in litigation or are being investigated by WHD for wage and hour violations are not eligible for the program. Employers will also only be eligible to use the pilot program one time to settle non-compliant practices affecting their employees.
In exchange for a settlement under the program, participating employees will forfeit their right to sue for unpaid wages. However, these employees will have the benefit of being able to recover their lost wages while avoiding attorneys’ fees and costs typically associated with private lawsuits.
What happens next?
Some industry experts are unsure that this program will be effective at curbing wage and hour violations. The National Employment Law Project, a worker advocacy group, told the Wall Street Journal that it opposes the program because it might allow employers acting in bad faith to avoid legal consequences.
According to a wage-theft investigation conducted by POLITICO’s Employment & Immigration reporter, Marianne LeVine, many employers already routinely refuse to provide employees with back pay, even after litigation and administrative actions find them at fault. In fact, a full 41% of the back pay that employers in 15 states were ordered to pay workers was never recovered.
Tammy McCutchen, principal at labor law firm Littler Mendelson P.C., is less concerned about the effectiveness of the program. Instead, McCutchen told the Wall Street Journal that the WHD offered a similar, less public program to employers that came forward with wage and hour violations while she was the WHD administrator under President George W. Bush, and it worked well for large employers who could afford to hire lawyers to work with the agency. McCutchen is convinced that this new, public program will now work well for smaller employers who might not hire their own lawyers.
In an op-ed in The Hill, WHD’s acting administrator, Bryan Jarrett, was confident that the PAID program will be “a win for employees, a win for employers, and a win for taxpayers.”
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Disclaimer: The information provided in this post is provided for informational purposes only and should not be relied upon or construed as legal advice and does not create an attorney-client relationship. You should review with your legal advisors how the laws identified in this post may apply to your specific situation.
Emerson is Compliance Counsel at Ceridian with many years of experience in U.S. and international legal research and writing. In his current role, Emerson tracks U.S. and international employment legislation impacting Ceridian products, works closely with development teams to integrate compliance changes into the company’s Dayforce HCM software, and conducts legal research as needed.View Collection