Human Resources |
By James E. Fagan, Offit Kurman
James E. FaganPrincipal, Offit Kurman
In March, the Wage and Hour Division of the U.S. Department of Labor announced a new pilot program, the Payroll Audit Independent Determination program. PAID took effect in April. Should your school participate?
DOL promotes the PAID program as an opportunity for employers to self-report wage-and-hour violations. Upon receiving such a report, DOL will conduct an independent review of the situation to see if the employer owes back wages. The promise is to expedite resolution of employers’ inadvertent overtime and minimum wage violations under the Fair Labor Standards Act without litigation.
According to DOL, its Wage and Hour division will "oversee resolution of the potential violations by assessing the amount of wages due and supervising their payment to employees.” If an employer chooses to participate in PAID and to “proactively work with the Division to fix and resolve their potential compensation errors," DOL will not impose penalties or liquidated damages to finalize a settlement. If the employer also agrees with DOL’s assessment of liability, the employer then pays its employees, who sign a release of any FLSA claims against it. Participating employers are not subject to civil monetary penalties and are not required to pay liquidated damages to employees.
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While the PAID program is touted as beneficial to both employers and employees, an employer’s participation may do more harm than good. There are simply too many unanswered questions surrounding PAID. We encourage considering these questions before deciding to invite DOL into your workplace by participating in the program:
Other important considerations:
Even though teachers are exempt from overtime provisions, many other employees are nonexempt, and it is always best practice to self-audit wage-and-hour programs. But schools do not need to invite the DOL into the workplace to operate within the law. Any successful self-audit focuses on the major compliance provisions of the FLSA:
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