- The U.S. Department of Labor (DOL) Friday announced “the immediate end” of its Payroll Audit Independent Determination (PAID) program, which allowed employers to self-report Fair Labor Standards Act (FLSA) violations to the agency.
- DOL instead pointed to its outreach and educational resources for employers, which it said are “sufficient for helping employers comply without relieving them of their legal obligations,” while adding that the PAID program allowed employers to “avoid litigation, penalties or damages, and prohibited affected workers from taking any private action on the identified violations.”
- Launched in 2018 under the Trump administration, the program was intended to allow parties to avoid litigation while also ensuring employees received back wages they were owed.
The announcement may not come as a surprise to longtime DOL watchers because of past opposition to the PAID program from worker advocates.
Shortly after the program’s launch, a collection of 11 state attorneys general sent a letter to DOL criticizing the program for, among other things, allowing employers to self-audit and self-report violations without the threat of liquidated damages or civil monetary penalties. A former attorney general for New York state sued DOL in 2018 alleging that it failed to respond to a records request involving the program, calling PAID “nothing more than a get-out-of-jail-free card for predatory employers.” The case was voluntarily dismissed in 2019.
“Workers are entitled to every penny they have earned,” Jessica Looman, principal deputy administrator of DOL’s Wage and Hour Division (WHD), said in the statement announcing the program’s end. “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage. The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.”
Proponents of the PAID program, including management-side attorneys who spoke to HR Dive around the time of DOL’s 2018 launch, praised the program for its potential benefit to employers even as others noted potential risks. A Freedom of Information Act request submitted by HR Dive revealed that at least 74 employers took part in PAID between April 2018 and Sept. 15, 2019. These employers reported 7,429 total wage and hour violations and paid more than $4 million in back wages to workers.
2020 marked a downward trend in the total number of back wages collected by WHD. During the last fiscal year, the agency recovered some $257 million, its lowest such mark in five years. In 2019, DOL collected a record $322 million from wage and hour claims.