The Department of Labor (“DOL”) is launching a test program which encourages employers to self-audit their Fair Labor Standards Act (“FLSA”) compliance.
Called the Payroll Audit Independent Determination Program (“PAID”), the program encourages employers to review their own payroll programs and self-report any violations directly to the DOL. Reportable violations include overtime and minimum wage violations. This, according to the DOL, includes violations based on “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.
In exchange for self-auditing and reporting, the DOL will excuse any liquidated damages and civil penalties for the report violations. Employers will still be responsible for making full backpay payments to any employees affected by the reported violations. The benefits of the program are only available for violations found by the employer and reported to the DOL and not any violations which are currently the subject of any actual or pending lawsuits or investigations. The DOL also reserves the right to deny an employer’s right to participate in the program.
Employers need to carefully consider their participation in the program. Under PAID’s guidelines, employees affected by the violations can choose not to accept the employer’s offer of back pay and instead choose to maintain their right to sue for damages under the FLSA. Even more concerning is that any documents or information submitted by an employer as a part of their participation in PAID can be subject to discovery in a subsequent lawsuit brought by affected employees who chose not to sign a waiver. The DOL points out that employers are prohibited from retaliating against employees who do not waive their right to sue the employer. Any documents submitted as a part of the PAID program will also be subject to disclosure under public records laws.
Even further, employers will still be liable under state law for any violations reported to the DOL as a part of the program. For Ohio employers, this means that any claims of reported federal law violations that also violate Ohio Revised Code Chapter 4111 can be brought even after an employer’s participation in the PAID program.
Employers should at all times be mindful of their compliance with all federal and state laws regarding employment. Employers should also carefully consider all their available options and potential liabilities before participating in the PAID program.
For more information about the DOL’s new PAID program, see: https://www.dol.gov/whd/paid/#6.
Attorneys at FHKAD advise and defend employers regarding wage and hour compliance and audits, and before the Department of Labor and courts. Feel free to contact Benjamin Albrecht, balbrecht@fishelhass.com, or Grant Bacon, gbacon@fishelhass.com, by email or at (614) 221-1216.