The U.S. Department of Labor launched a wage and hour self-audit program for employers on April 3, 2018. The pilot program, called Payroll Audit Independent Determination (PAID), is designed to allow employers to identify non-compliance with the Fair Labor Standards Act (FLSA) in their pay policies.
Generally, under the FLSA, an employer can be held liable for liquidated (double) damages for any willful violations of the Act. However, the PAID program will allow an employer to avoid paying the liquidated (double) damages that are imposed on employers for willful violations. However, employers remain skeptical of the program, and for good reason.
The PAID program is designed to identify violations of the federal FLSA, not state wage and hour laws. As the FLSA’s minimum wage becomes increasingly outdated, many states are increasing their state minimum wages. Additionally, some states have passed legislation to improve working conditions by requiring the employer to provide meal and rest breaks. One concern for employers is that they would identify a violation of the FLSA, notify and pay the employee, only for the employee to then become suspicious of other wage violations that may be present under state labor laws. In other words, the employer may alert the employee to wage and hour violations that employee would have otherwise been unaware of.
The program has been received by both employers and employees with trepidation.
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