The U.S. Department of Labor has reinstated a self-audit initiative that allows private employers to identify and resolve potential wage and leave violations under federal law. Known as the Payroll Audit Independent Determination (PAID) program, this voluntary compliance effort offers a structured path for employers to correct Fair Labor Standards Act (FLSA) and certain Family and Medical Leave Act (FMLA) issues without litigation or prolonged investigation.
How the Program Works
To participate, employers first review program guidance and conduct an internal audit of their wage and leave practices. If issues are found, the employer contacts the Wage and Hour Division (WHD) of the Department of Labor to request participation. If accepted, the employer submits details about the identified violations. WHD then evaluates the submission, calculates back wages or other remedies due, and provides settlement documentation.
Employers must implement the required corrections or payments within 15 days of receiving WHD’s summary. The entire process is designed to be completed in under 90 days.
What Types of Issues Are Covered
The PAID program covers a range of common FLSA wage and hour problems, such as:
- Missed overtime pay
- Misclassification of exempt employees
- Unpaid “off-the-clock” work
- Incorrect overtime rate calculations
It also covers certain FMLA concerns, including:
- Miscalculating leave eligibility
- Failing to properly notify employees of FMLA rights
- Penalizing employees for protected absences
- Inaccurate leave tracking or mislabeling absences
Who Can Participate
Participation is open to private employers covered under the FLSA or FMLA. However, there are limitations:
- Employers under active WHD investigation or litigation are not eligible
- Employers who have resolved similar claims recently or participated in PAID in the last three years may be disqualified
- WHD has discretion to accept or decline participants on a case-by-case basis
What Employees Need to Know
Employee participation is voluntary. Workers can choose to accept or reject the resolution offered through the program. If they accept, they sign a limited release related only to the specific violation and time period addressed. Rejecting the offer preserves the employee’s right to pursue private action or other remedies under state, local, or additional federal laws.
Importantly, participation in PAID does not shield employers from future DOL audits. Any self-audit records submitted to WHD are subject to Freedom of Information Act requests, just like other agency records.
What Employers Should Consider
The program offers a way to resolve certain federal compliance issues quickly, with clear parameters and without additional penalties. However, it does not eliminate exposure under other statutes, such as the Americans with Disabilities Act or state wage laws. Employers should carefully review their practices and consult with legal or compliance advisors before initiating a PAID request.
For employers who proactively maintain compliance and want to correct isolated issues in good faith, PAID provides a helpful option to avoid more formal enforcement action while ensuring employees are made whole.
More information, including compliance tools and instructions, is available on the DOL’s Wage and Hour Division website.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.
