No matter which side you’re on, the relaunch of the PAID program is bad policy–for employees and employers alike. The Department of Labor (DOL) recently relaunched the Payroll Audit Independent Determination program (PAID). It first appeared in 2018, but was discontinued in 2021 after a change in administration. The stated goals of PAID remain the same: to fix “mistakes”, ensure employees get back wages, and avoid court. Sounds like a good idea, right? Not quite. As discussed below, the program is likely to cause more harm than good, for everyone except the DOL.
What is PAID?
PAID is a federal amnesty program for labor law violations. It allows employers who admit to violating labor law to avoid paying penalties. Here’s how it works:
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Employers audit their payroll to find any Fair Labor Standards Act (FLSA) violations.
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They identify affected workers and calculate back pay.
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Employers report their findings to the DOL, which attempts to broker a settlement.
In most cases, the deal requires the employer to pay back wages within 15 days. But only if the worker signs a waiver giving up the right to sue or collect double damages and interest. The waiver applies to wage claims under FLSA. The DOL touts PAID as a success because it requires less time and fewer resources than traditional enforcement. But who really wins with PAID?
How the Program Leaves Workers Underpaid, and Employers Exposed
Workers Don’t Win
Under PAID, employees receive only the unpaid wages the employer calculates are owed. Accepting the “deal” means giving up the right to double damages or interest under the FLSA. It’s an unfair deal, especially if you work in a state with stronger wage theft laws than the FLSA. Even if you don’t, PAID may limit how far back wages are calculated. If your employer reports two years of violations but the underpayment lasted longer, signing the waiver could give up a year of back pay. That’s because under FLSA if you sue for willful violations, you can collect up to 3 years of unpaid wages. With PAID, though, that’s not an option.
But PAID isn’t just risky for workers, employers face hidden risks too.
PAID is supposedly meant to help businesses settle wage claims, but it can backfire. That’s partly because the DOL can’t force workers to waive their state claims in return for back pay. It only has the authority to ask workers to waive limited federal claims. Settling federal claims through PAID doesn’t automatically mean state claims are likewise settled. So employers who opt in to PAID may still face state law claims from state regulators or private attorneys too. And, in some states, such claims allow workers to recover triple damages for unpaid wages for a longer period. As a result, employers should consider all possible ramifications before opting in to PAID, especially if their violations of the FLSA also violate similar state laws that are designed to prevent and remedy wage theft.
How Workers Can Protect Themselves
If your employer or the DOL asks you to sign a document in exchange for getting straight time or overtime pay you’ve already earned, don’t. Consult with a wage and hour lawyer first. A wage and hour lawyer can look over the details of your case and sue your employer for the full amount you’re owed, plus interest. Winning your case becomes much easier when your employer has already admitted to wage theft.
At Davis Employment Law, PLLC, our experienced wage theft lawyer understands state and federal labor laws and is dedicated to protecting your pay. If your employer has stolen your wages, contact 214-224-0466 today for a free case evaluation.