It can be an employer’s worst nightmare.
A DOL Investigator arrives unannounced at your worksite. She reviews your files and interviews your employees. She finds a handful of time record violations – an unpaid 30 minutes here or there, perhaps even a misclassified salaried exempt employee. You are now on the hook for thousands of dollars in back pay, liquidated damages, and penalties.
Imagine instead that you uncovered the mistakes before the Investigator came knocking. What do you do? DOL has a new idea: report yourself.
It is called the PAID Program. It is a voluntary, six month pilot program designed to resolve overtime and minimum wage violations under the Fair Labor Standards Act. If the employer agrees to pay all back wages due, DOL’s Wage and Hour Division (WHD) will waive liquidated damages and penalties. However, when the employer comes forward, the WHD will examine your records to confirm that you have found all of the violations. If the WHD uncovers additional violations it will include those in the total settlement amount.
If you are interested in this program, proceed with extreme caution. The WHD has created FAQs to address several drawbacks of the PAID Program.
Will it keep employees from suing your business?
“No. Employees may opt to accept the payments offered or they may reject them and retain all of their rights. It is purely the employee’s choice whether to accept the payment of back wages due, and employers are prohibited from retaliating against the employee for his or her choice.
If the employee chooses to not accept the payment, the employee will not release any private right of action. Additionally, if the employee chooses to accept the payment, releases are limited to the identified violations and time period for which the employer is paying the back wages.
The PAID program does not waive WHD’s right to conduct any future investigations of the employer.”
How long does the employer have to repay the back wages?
“Employers must pay all back wages due by the end of the next full pay period after receiving the summary of unpaid wages, and provide proof of payment to WHD expeditiously.”
Will this keep the state from investigating?
“No. WHD may not supervise payments or provide releases for state law violations. The PAID program does not preclude an employer from separately settling claims as allowed under state law.”
Will the information be public?
“Yes. Self-audits under the PAID program are subject to the same FOIA requirements and defenses as any WHD investigation or audit.”
We don’t yet know the results of the pilot program. Employers are probably not eager to lay bare their honest mistakes to the federal government or expose themselves to avoidable lawsuits over pay errors. Nevertheless, employers should be conducting regular self-audits and correcting pay errors and misclassifications before the government is alerted. Wage theft harms workers, taxpayers, and the economy. Employers do not need to become entangled with the government to simply pay their employees what they are owed.
Would you like help auditing your payroll records?
Contact MBA today. Our HR Consultants can assist with a thorough audit and advise you of any wage and hour errors.