The federal Department of Labor’s Wage and Hour Division recently announced a six-month self-audit pilot program intended to allow employers to review and correct overtime and minimum wage violations. The Payroll Audit Independent Determination (PAID) program provides incentives for employers to self-determine possible FLSA violations and to correct any wage underpayments with a reduced threat of subsequent litigation.

Employers participating in PAID would first register with the program before initiating the self-audit. The program would not apply to existing litigation or administrative enforcement actions. After the audit, the employer would contact Wage and Hour with the results, come to an agreement with DOL as to corrective actions, and then issue payment by the first pay period following the agreement. Employees who accept payment of back wages would waive rights to litigate those specific claims.

Wage and Hour touts PAID as a way for employers and employees to avoid the costs and delays associated with current administrative and litigation procedures for determining FLSA violations. If the pilot program proves successful, DOL will evaluate it for possible permanent adoption. Information on PAID can be found here.