United States: Getting "PAID" Just Got Easier: The DOL Rolls Out A Pilot Initiative To Streamline The Resolution Of Wage And Hour Violations

Executive Summary. On March 6, 2018, the Wage and Hour Division (W&HD) of the U.S. Department of Labor (DOL) rolled out a new nationwide pilot initiative, called the Payroll Audit Independent Determination program—or “PAID.” This initiative is designed to streamline the resolution process of potential overtime and minimum wage violations of the Fair Labor Standards Act (FLSA). Such potential violations as “off-the-clock” work violations, failures to pay overtime wages, or employee misclassification would expressly fall within the ambit of PAID. According to the W&HD, PAID’s objectives are expeditious resolution of FLSA claims without litigation, improved employer compliance with its overtime and minimum wage obligations under the law, and a fast delivery of owed back wages to workers.

While PAID is expected to benefit both employees and employers, questions remain regarding the program’s practical effect and the potential for more worker lawsuits resulting from companies’ voluntary decision to self-audit their pay practices and bring them to compliance. PAID lacks clarity on many fronts, and companies should closely monitor this pilot program as it takes shape over the next several months.

The Projected Benefits of PAID. According to the W&HD, all FLSA-covered employers are eligible to participate in PAID. But, companies may not use this pilot program to resolve claims that the DOL is already in the process of investigating, or which are already being litigated, arbitrated, or otherwise resolved in another forum. Nor may companies initiate the self-audit if their representatives or counsel have already announced an interest in litigating or otherwise settling the dispute with the affected worker(s).

PAID is expected to benefit both employees and companies. The projected benefit to workers lies in the program’s assurance that workers will receive 100 percent of owed back wages faster than they would through litigation, arbitration, or in any other proceeding. This will eliminate the associated litigation expenses and attorneys’ fees. Under the program, employees can choose whether to accept or reject the payment of back wages, and employers may not retaliate against employees for either choice. If the employee rejects the payment, s/he will preserve any private right of action s/he may have. Even if the employee accepts the payment, the company cannot get a comprehensive release of all potential FLSA claims from the employee, but only the release of the specifically identified FLSA violations, limited to the timeframe for which the company pays the back wages. The W&HD expects that PAID will prompt companies to become better apprised of the W&HD’s compliance assistance materials and audit their pay practices, which will lead to fewer violations overall. This is another projected long-term benefit to workers.

The presumed benefit to companies is that companies will become compliant with pay obligations under the FLSA and protect the rights of workers. PAID is expected to expeditiously resolve minimum wage and overtime violations, which will also save companies litigation expenses and attorneys’ fees. Although PAID would require payment of all back wages due to employees, additional payment of liquidated damages or civil monetary penalties, otherwise available in FLSA suits, would not be on the table so long as employers voluntarily participate in the program and proactively work with the W&HD to address the non-compliance.

How Is PAID Expected to Work? According to the DOL’s website, to participate in PAID, employers must first review the requisite information about PAID and the W&HD compliance assistance materials, available online. Employers must then self-audit their pay practices for potential non-compliance. If the employer discovers a non-compliant practice, or believes its pay practices may be compliant but wishes to proactively resolve any potential claims, the employer must take these four steps:

  1. Specifically identify the potential violations;
  2. Identify affected employees;
  3. Identify the timeframes in which each employee was affected; and
  4. Calculate the back wages the employer believes are owed to each affected employee.

After the employer completes these four steps, it should then contact the W&HD to discuss the discovered non-compliance. If the W&HD approves the employer’s request to participate in PAID, it will inform the employer of the manner of transmitting the required information to the W&HD, including:

  1. The back wages calculations along with evidence and explanation of the calculations;
  2. A concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
  3. A certification that the employer reviewed all pertinent information, terms, and compliance assistance materials;
  4. A certification that the employer is not already litigating the identified pay practices in court, arbitration, or otherwise, and the affected employee’s representative or counsel has not already expressed interest in litigating or settling same; and
  5. A certification that the employer will adjust its practices to avoid the same violations in the future.

After the company provides this information, the W&HD will evaluate it and contact the employer with the next steps. After assessing the back wages, the W&D will issue a summary of unpaid wages, along with forms describing the settlement terms for each employee (again, limited to violation(s) for which the employer has paid the back wages). Employers must issue prompt payment directly to the affected employee(s), by the end of the next full pay period after receiving the summary of unpaid wages, and provide proof of payment to the W&HD without delay.

The trial run for the pilot program is approximately six months. After this initial period, the W&HD will assess the effectiveness and success of PAID, determine if any improvements should be made, and decide on the next steps.

Questions Remain Regarding PAID’s Practical Effect. Questions remain regarding the W&HD’s self-audit initiative’s practical implications for companies that consider taking advantage of the program. For example, what are the criteria for participation in PAID? What happens if the W&HD rejects a company from participation? If there is a rejection, will the W&HD preserve the right to investigate the company’s self-reported violations? By allowing employers to participate in PAID, the W&HD has expressly reserved the right to investigate the same employers in the future. Based on that, is it possible the W&HD will retain the right to investigate the program “rejects” for their self-reported violations, as well?

Participation in PAID may also expose companies to liability for worker lawsuits that otherwise may have not happened. As discussed above, PAID expressly gives the affected employee the choice to accept the payment limited to the back wages, or reject the payment, in which case the employee can file an FLSA lawsuit and be eligible to recover liquidated damages as the prevailing party, equal to the amount of back pay.

Another concern is whether the DOL’s expedition of outstanding back wage payments to employees will always cut off the employer’s liability for the same violations. As seen from a recent decision from the U.S. District Court for the Middle District of Florida, Lopez v. Real Monarca Inc., Case No. 2:17-cv-442-FtM-38CM (M.D. Fla. Mar 2, 2018), an employee may be able to receive the back wages due and sue the employer for the same violations. In Lopez, the court found that, by merely being “involved” with the settlement process, the DOL did not “supervise” the payment to the worker pursuant to 29 U.S.C. § 216(c). In the alternative, court held that the worker’s acceptance of the back wages was not knowing or voluntary. As a result, the plaintiff had not waived his right to sue under the FLSA, and could sue on his claims even though he had cashed the check for back wages.

Further, it is unclear if PAID is limited only to the federal FLSA violations or would also encompass any analogous state wage and hour claims. Potentially, an affected employee could accept the back wages for the identified non-compliant practices under the FLSA, and still bring a lawsuit under his or her respective state wage and hour laws. The W&HD has not made this issue clear. Assuming PAID does not extend to state claims, companies may feel deterred from volunteering their non-compliance information to the DOL.

Assuming, on the other hand, that companies can secure general releases of both the federal and state claims, the presumed benefit to companies is much more tangible. Moreover, the PAID program most likely presents the most expeditious, cost-effective manner to resolve a potential FLSA issue.

Conclusion. We will continue to monitor the DOL’s updates regarding the PAID program and will provide additional information as it becomes available.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
McLane Middleton, Professional Association
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions