U.S. Department of Labor Launches Pilot Program to Encourage Self-Reporting of Wage Hour Violations

The Fair Labor Standards Act (FLSA) protects the right of all qualified employees to receive minimum wage and overtime pay from their employers. If an employer fails to meet its legal obligations, the employee has the right to bring a civil lawsuit to recover back pay and additional damages. A recent proposal by the U.S. Department of Labor may allow some New York employers to avoid litigation if they “self-report” overtime and wage hour violations.

How the PAID Program Could Help New York Workers

On March 6, 2018, the Department's Wage and Hour Division, which oversees FLSA enforcement at the federal level, announced it would conduct a six-month pilot project called the Payroll Audit Independent Determination (PAID) program. The basic idea is that employers who “inadvertently” fail to properly pay the minimum wage or overtime can agree to a voluntary audit and FLSA supervision to ensure that their employees receive their correct pay. In exchange, the employer will receive amnesty from many of the additional penalties provided for under the FLSA, including liquidated damages and paying the court costs of employees who file a successful lawsuit.

According to the Division, eligibility for RAID is limited to government agencies, hospitals, educational institutions, and private employers with annual sales or receipts of at least $500,000. The employer must also have at least two employees who are engaged in “interstate commerce” or provide “domestic service.” Obviously, the employer must already be covered by the FLSA.

To participate in PAID, eligible employers must obtain certain compliance materials from the Division's website. After reviewing these materials, the employer then conducts a self-audit to look for “potentially non-compliant practices.” If an employer identifies a problem–e.g., not paying an eligible employee overtime–it must then notify the Division.

The Division will then asked for more detailed information about each employee affected by the employer's non-compliant practices. Employers are expected to remedy any violations by the “end of the next full pay period” after the Division assesses the correct amount of any back wages due. So long as the employer promptly pays the amounts due in the Division notice, it will not face any further legal sanctions.

Do You Need Help from a New York City Employment Attorney?

According to the Division, the PAID program “will ensure that more employees receive back wages they are owed—faster.” But it remains to be seen how this pilot project will work in practice. Among other questions that need to be addressed: What happens to an employer's potential liability under state or local laws for a self-reported violation? In other words, even if the Division will not pursue any further damages against an employer under the FLSA, employees may have other wage and overtime rights under New York State (and New York City) laws. Will the federal government provide immunity for employers from these claims?

It should also be noted that the Division will not allow an employer to enter the PAID program if it is already under investigation or involved in litigation arising from past overtime and wage hour violations. The Division has further stated that it will not force any employee to accept a PAID settlement.

Despite these qualifications, the PAID program does have the potential to facilitate speedy resolution of unpaid wages for many New York workers. If you have questions or concerns about your own employer's labor practices and need advice from a qualified New York employment attorney, contact the Law Offices of Nisar Law Group, P.C., today.


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