Department of Labor Launches New Voluntary Payroll Audit Pilot Program

Department of Labor Launches New Voluntary Payroll Audit Pilot Program

 The U.S. Department of Labor’s Wage and Hour Division announced a new nationwide voluntary self-audit pilot program designed to resolve potential violations of the Fair Labor Standards Act (FLSA) by allowing employers to pay employees any back wages they are owed without having to pay litigation expenses or penalties.

The Payroll Audit Independent Determination (PAID) program covers violations of the FLSA overtime and minimum wage requirements. For example, employers can use the PAID program to resolve FLSA violations related to alleged “off-the-clock” work, failures to pay overtime at one-and-one-half times the regular rate of pay, or misclassification of employees as exempt from the FLSA’s minimum wage and overtime requirements.

All FLSA-covered employers are eligible to participate in the pilot.  However, employers cannot use the program to resolve claims that are already being investigated or litigated.

Employers who choose to participate in the PAID program are generally required to pay employees 100% of any back wages owed as well as review the Wage and Hour Division’s compliance assistance materials, carefully audit their pay practices, and agree to correct the pay practices at issue going forward.  Employers who self-report and cooperate with the U.S. Department of Labor to remedy inadvertent FLSA violations will not have to pay any additional liquidated damages or civil monetary penalties in connection with resolving the compensation at issue.

The pilot program will operate for six months, after which it will be evaluated and, potentially, made permanent.