PROGRAM OVERVIEW AND PARTICIPATION
- How is PAID a win for employees?
- How is PAID a win for employers?
- How is PAID a win for taxpayers?
- Who can participate in this program?
- May employers use this program to resolve claims that are already being investigated or litigated?
- What if an affected employee files a lawsuit without knowing that the employer is already participating in PAID?
- What types of violations does this program address?
- What if an employer has already paid back wages to employees before participating in the program?
- Can an employer participate in the program if it did not keep records of the hours its employees worked?
- Does this program require employees to participate?
- Why would employers participate in the program if they can perform their own internal audits and pay whatever additional wages they conclude are appropriate?
HOW DOES THE PROGRAM WORK?
- What must an employer do to participate in the program?
- What does the employer do after it reviews and assembles the above information?
- What happens after the employer provides the requisite information and acknowledgments?
- To what extent will WHD examine employers' records for violations other than those the employers propose to resolve in the program?
- Does PAID require employers to include former employees in their back wage calculations?
- If WHD denies an employer's request to participate in the program, will WHD then investigate the employer based on the information the employer already provided?
- After WHD reviews the back wages due, what happens next?
- By when must employers pay the back wages to employees?
- How long does the employer have to make needed remedies under the FMLA PAID?
- How long should employers and employees expect the process to take?
- What types of remedies are available under PAID for FMLA self-audits?
- If an employer makes corrections based on a PAID audit that includes nonmonetary remedies, will the employer need to report those as well?
- How long does the employer have to make needed remedies under the FMLA PAID?
- What effect, if any, will employers' participation in the program have on potential claims arising under state or other federal law?
- Is data or information provided to WHD in connection with the program subject to the Freedom of Information Act (FOIA)?
- What happens to the back wage payments for former employees who cannot be located?
PROGRAM OVERVIEW AND PARTICIPATION
How is PAID a win for employees?
Employees deserve the wages they earn and the leave they are entitled to take. When employers make mistakes, PAID helps employees receive their minimum wage, and overtime back wages or get their FMLA leave issues resolved as quickly as possible. PAID protects the employees' rights and allows each employee to make the decision that is best for him or her. Employees will receive 100% of the back wages paid or other FMLA remedies due, without the expense of litigation.
To benefit employees moving forward, the program requires employers to review WHD's compliance assistance materials, carefully audit their pay and/or leave practices, and agree to correct the practices at issue.
How is PAID a win for employers?
PAID provides a framework for proactive resolution of potential minimum wage and overtime, under the FLSA, as well as certain potential violations under the FMLA. The program allows employers and employees to resolve such claims expeditiously and without litigation.
Additionally, although WHD will require payment of all back wages or provision of other FMLA remedies due, WHD will not require additional payment of civil monetary penalties when employers choose to participate in the program and proactively work with WHD to fix and resolve the compensation and/or leave practices at issue.
How is PAID a win for taxpayers?
The effective and efficient use of taxpayer resources is a top priority. By streamlining the resolution of compliance issues and improving compliance overall through this program, WHD can focus more of its resources on bad actors who intentionally violate the law.
Who can participate in this program?
All private employers covered by the FLSA or FMLA are eligible to participate in the program.
Government entities may also participate in the program to address violations of the FLSA, but they must pay monetary back wages to affected employees rather than offering, for example, compensatory time.
Employers who have participated in the PAID program within the last three years to resolve FLSA minimum wage and/or overtime violations, or FMLA violations, are not eligible to participate. Likewise, if WHD or a court of law have found within the last three years that the employer has violated the FLSA minimum wage and overtime provisions, or the FMLA, they may not be eligible to participate.
May employers use this program to resolve claims that are already being investigated or litigated?
No. An employer may not initiate the process to resolve issues under the FLSA and/or FMLA for which WHD is already investigating the employer, or that the employer is already litigating in court, arbitration, or otherwise. An employer likewise may not initiate the process when an employee's representative or counsel has already communicated an interest in litigating or settling the issue outside of PAID.
Also, employers cannot use the program to repeatedly resolve the same violations, as this program is designed to identify, correct, and ensure future compliance.
What if an affected employee files a lawsuit without knowing that the employer is already participating in PAID?
If an employer is already participating in the program before receiving notice that the employee may file a lawsuit or is interested in settling the issue, WHD may continue to work with the employer to supervise back wage payments to employees who want the payments without resorting to litigation.
What types of violations does this program address?
This program covers potential violations of the FLSA's minimum wage and overtime requirements. This could include, for example, violations based on alleged "off-the-clock" work, failures to pay overtime at one-and-one-half times the regular rate of pay, or failure to pay bona fide executive, administrative, professional employees on a salary basis as required.
The program also covers certain potential violations of the FMLA's leave requirements. This could include, for example, miscalculating the amount of FMLA leave available to an employee, incorrectly determining that an employee is ineligible for FMLA leave, improperly assessing attendance points when an employee takes FMLA leave, or improperly categorizing FMLA leave as an unexcused absence.
What if an employer has already paid back wages to employees before participating in the program?
If an employer pays back wages to its employees before participating in PAID, then WHD will not have supervised the payment, and the employer will not be eligible to resolve the underlying violations through the program.
Can an employer participate in the program if it did not keep records of the hours its employees worked?
Potentially. WHD maintains its discretion to accept or refuse cases that require extensive reconstruction of records. Employers who wish to address an issue through PAID for which there are no records could gather the information through other means, such as an employee survey.
Does this program require employees to participate?
No. Employees may freely accept the payments or other remedies offered or they may reject them and retain their rights. It is purely the employee's choice whether to accept the payment of back wages due or other remedies offered, and employers are prohibited from retaliating against the employee for his or her choice.
If the employee chooses to not accept the payment or remedy offered, the employee will not release any private right of action. Additionally, if the employee chooses to accept the payment of back wages, releases are limited to the identified violations articulated in the PAID Acceptance Letter and the time period for which the employer is paying the back wages or providing other remedies.
PAID does not waive WHD's right to conduct any future investigations of the employer.
Why would employers participate in the program if they can perform their own internal audits and pay whatever additional wages they conclude are appropriate?
Employers must pay their employees all the minimum wages and overtime they are owed under the FLSA, and employers should correct any mistakes and pay their employees the wages they are owed expeditiously. However, under the FLSA, private out-of-court settlements do not result in a waiver of employees' rights to sue their employer. The FLSA authorizes the Department to supervise the payment of unpaid wages and allows employees to freely accept the payments and release their rights to privately sue the employer for the unpaid wages and liquidated damages.
HOW DOES THE PROGRAM WORK?
What must an employer do to participate in the program?
To participate in the program, employers must first review the requisite information about the program and compliance assistance materials---all of which is available at https://www.dol.gov/agencies/whd/paid. This material not only helps employers understand the program but also helps them more fully understand their obligations under the FLSA and/or the FMLA before conducting their self-audit.
After reviewing the materials, employers must then audit their compensation and/or leave practices for potentially non-compliant practices. If the employer discovers any non-compliant practices, or if the employer believes its compensation and/or leave practices may be lawful but wishes to proactively resolve any potential claims anyway, the employer must then:
- specifically identify the potential violations,
- identify which employees were affected,
- identify the timeframes in which each employee was affected, and
- calculate the amount of back wages the employer believes are owed to each employee and/or specify any other FMLA remedies that are necessary to be in compliance.
What does the employer do after it reviews and assembles the above information?
The employer then contacts WHD to discuss the issues for which it seeks resolution. Unless WHD denies the employer's request to participate in the program at the outset, WHD will then inform the employer of the manner in which the employer must submit required information, including the following:
- corrected wage calculations described above, accompanied by both evidence and explanation concerning how the calculations were made;
- any other remedies described above, along with supporting evidence and methodology;
- a concise explanation of the scope of the potential violations for possible inclusion in a release of liability;
- a certification that the employer reviewed all the information, terms, and compliance assistance materials;
- a certification that the employer is not litigating the compensation or leave practices at issue under the FLSA or FMLA in court, arbitration, or otherwise, and likewise has not received any communications from an employee's representative or counsel expressing interest in litigating or settling the same issues outside of PAID; and
- a certification that the employer will adjust its practices to avoid the same potential violations in the future.
What happens after the employer provides the requisite information and acknowledgments?
WHD will then evaluate the information and contact the employer to discuss the next steps, including the collection of any other information necessary for WHD to review the back wages or other FMLA remedies due for the identified violations. If WHD accepts the employer into PAID, WHD will provide the employer with the proposed scope of the release of liability for the potential violations presented.
To what extent will WHD examine employers' records for violations other than those the employers propose to resolve in the program?
If WHD allows an employer to participate in PAID, WHD will examine the employer's records to verify the information, and the calculations submitted and/or other information as necessary to confirm the back wages or other FMLA remedies due for the potential violations the employer identified. If WHD discovers additional minimum wage, overtime, or leave issues outside the scope of the employer's proposal, WHD will ordinarily attempt to resolve them as part of the audit.
Does PAID require employers to include former employees in their back wage calculations?
Yes, where appropriate. Like any other WHD enforcement action under the FLSA or the FMLA, back wages are computed or other FMLA remedies provided, as appropriate, for all employees affected within the statute of limitations, regardless of whether they are current or former employees.
If WHD denies an employer's request to participate in the program, will WHD then investigate the employer based on the information the employer already provided?
WHD is always ready to help employers understand and comply with their legal obligations. WHD encourages employers to proactively seek compliance or technical assistance to comply with the laws WHD enforces, and PAID is designed to facilitate this process. Similarly, WHD wants to work with good faith employers through PAID to resolve violations of FLSA minimum wage, overtime, and/or FMLA leave requirements. If WHD declines an employer's good faith request to participate in the program, the employer's request to participate will not serve as the basis for a future investigation involving the identified potential violations, employees, and timeframes, unless WHD has reason to believe that health or safety are at risk (for example, if there are child labor violations).
After WHD reviews the back wages due, what happens next?
After WHD reviews the back wages due, it will issue a summary of unpaid wages. WHD will also issue forms describing the settlement terms for each employee, which employees may freely choose to sign to receive payment. The release of claims provided in the form will reflect the previously provided release language and, again, will be limited to the potential violations and specific time periods for which the employer has paid back wages or other remedies. Employers are responsible for issuing prompt payment or promptly providing other remedies; WHD will not distribute the back wages.
If other FMLA remedies were due, WHD will review the records of violations and proposed remedies and confirm adequacy of the proposed remedy based on your submission. Remedies must be implemented within 15 days of receiving the finalized self-audit results from WHD.
By when must employers pay the back wages to employees?
Employers must pay all back wages due within 15 days of receiving the summary of unpaid wages and provide proof of payment to WHD expeditiously.
How long does the employer have to make needed remedies under the FMLA PAID?
Employers must make all remedies within 15 days of receiving the summary of remedies due and provide proof of payment/resolution to the WHD expeditiously.
How long should employers and employees expect the process to take?
WHD expects that audits conducted under the program will typically take fewer than 90 days to complete if the employer has taken the appropriate preparatory steps before contacting WHD.
What types of remedies are available under PAID for FMLA self-audits?
Employees may be compensated or restored benefits lost because of an FMLA violation, or they may be reimbursed for other actual monetary losses sustained as a direct result of the violation, such as costs the employee incurred hiring someone else to care for a family member. Remedies may also include the removal of points under a "no-fault" attendance policy, the withdrawal of a disciplinary action, or other nonmonetary relief, such as employment, reinstatement, or promotion, where appropriate.
If an employer makes corrections based on a PAID audit that includes nonmonetary remedies, will the employer need to report those as well?
Yes. The employer must specify and provide documentation of all remedies that are necessary to be in compliance, including nonmonetary remedies. The employer should be prepared to provide evidence of, and the methodology used, to determine the remedies provided.
How long does the employer have to make needed remedies under the FMLA PAID?
Employers must make all remedies within 15 days of receiving the summary of remedies due and provide proof of payment/resolution to the WHD expeditiously.
What effect, if any, will employers' participation in the program have on potential claims arising under state or other federal law?
WHD may not supervise payments or provide releases for state law violations. The program does not preclude an employer from separately settling claims as allowed under state law. Participating employers must acknowledge and certify that participating in the PAID program does not cut off employee rights under other laws, such as the Americans with Disabilities Act, the Pregnant Workers Fairness Act, and/or other state or local laws.
Is data or information provided to WHD in connection with the program subject to the Freedom of Information Act (FOIA)?
Self-audits under the program are subject to the same FOIA requirements and defenses as any WHD investigation or audit.
What happens to the back wage payments for former employees who cannot be located?
In all WHD enforcement actions, back wages are sent to the U.S. Treasury when workers cannot be located after three years.
For additional information, please contact the Wage and Hour Division.