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Wage and Hour Division (WHD)

PAID

Payroll Audit Independent Determination

The Wage and Hour Division’s (WHD) new nationwide program, the Payroll Audit Independent Determination (PAID) program, facilitates resolution of potential overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The program’s primary objectives are to resolve such claims expeditiously and without litigation, to improve employers’ compliance with overtime and minimum wage obligations, and to ensure that more employees receive the back wages they are owed—faster.

Under PAID, employers are encouraged to conduct audits and, if they discover overtime or minimum wage violations, to self-report those violations. Employers may then work in good faith with WHD to correct their mistakes and to quickly provide 100% of the back wages due to their affected employees.

Read testimonials about PAID from participants



How PAID Works

On this website, interested employers can find the resources they need to participate in PAID, starting with relevant FLSA compliance assistance materials.

After reviewing these materials, employers must then audit their compensation practices for potentially non-compliant practices. Once an employer identifies any potential claims it wants to resolve, 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.

Next, the employer should contact WHD to discuss the issues for which it seeks resolution. WHD will then inform the employer of the manner in which the employer must submit required information, including the following:

  • The back wage calculations 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 of the program's information, terms, and compliance assistance materials; and
  • A certification that the employer meets all eligibility criteria of the program.

WHD will then evaluate this information and contact the employer to discuss next steps, including the collection of any other information necessary for WHD to assess the back wages due for the identified compensation practices. Employers are responsible for issuing payment by the end of the next full pay period after receiving the summary of unpaid wages and must provide timely proof of payment to WHD.


Participating in PAID

To participate in PAID, you must be 1) covered by the FLSA, 2) interested in proactively resolving potential minimum wage and/or overtime claims under the FLSA, and 3) willing to commit to future compliance under the FLSA.

Coverage

See: Fact Sheet #14: Coverage Under the Fair Labor Standards Act (FLSA)
See: elaws Fair Labor Standards Act Advisor

Coverage Questions

Does your organization have two or more employees?

  • If yes, go to the next question.
  • If no, your employees are not covered under the FLSA by enterprise coverage, but still may be covered under individual coverage (see below).

Is your organization:

  • A Federal, state, or local government agency;
  • A hospital, or an institution primarily engaged in the care of the sick, the aged, or the mentally ill or developmentally disabled who live on the premises (it does not matter if the hospital or institution is public or private or is operated for profit or not-for-profit);
  • A pre-school, elementary or secondary school, institution of higher learning (e.g., college), or a school for mentally or physically handicapped or gifted children (it does not matter if the school or institution is public or private or operated for profit or not for profit); or
  • A company/organization with annual dollar volume of sales or receipts in the amount of $500,000 or more?
  • If yes to any one of the above, your employees are covered under the FLSA by enterprise coverage.
  • If no, your employees are not covered under the FLSA by enterprise coverage, but still may be covered under individual coverage.

Do your employees:

  • Engage in interstate commerce;
  • Produce goods for interstate commerce and/or provide services closely related and directly essential to the production of goods for interstate commerce; or
  • Provide domestic service?
  • If yes to any of the above, your employees are covered under the FLSA by individual coverage.
  • If no, your employees are not covered under the FLSA by individual coverage.

If you have any questions about PAID or general compliance concerns, you can call WHD confidentially at 1-866-4USWAGE.


Determine Your Eligibility

When contacting WHD about potentially participating in PAID, be prepared to certify the following is true:

  • You are an employer covered by the FLSA.
  • The employees included in your proposed PAID self-audit are not subject to prevailing wage requirements under the H-1B, H-2B, or H-2A Visa Programs, the Davis Bacon Act or Related Acts, the Service Contract Act, or any Executive Order.
  • Neither WHD nor a court of law has found within the last five years that you have violated FLSA minimum wage and/or overtime requirements by engaging in the same compensation practices at issue in this proposed PAID self-audit.
  • You are not currently a party to any litigation (private or with WHD) asserting that the compensation practices at issue in this proposed PAID self-audit violate FLSA minimum wage and/or overtime requirements.
  • WHD is not currently investigating the compensation practices at issue in this proposed PAID self-audit.
  • You have informed WHD of any recent complaints by your employees or their representatives to you or your representatives, to WHD, or to a state wage enforcement agency asserting that the compensation practices at issue in this proposed PAID self-audit violate FLSA minimum wage and/or overtime requirements.
  • You have not previously participated in PAID to resolve potential FLSA minimum wage or overtime violations resulting from the compensation practices at issue in this proposed PAID self-audit.
  • You have a continuing duty to update WHD on any changes to the above information and/or representations.

WHD maintains its discretion to determine whether to accept employers into PAID. Potential participants are examined on a case-by-case basis.


Review FLSA Compliance Materials

Compliance Assistance Review

Now that you have confirmed that your business must comply with the FLSA, to participate in PAID, you must review compliance assistance materials about the FLSA. This material will not only help you understand the program, but also help you more fully understand your minimum wage and overtime obligations under the FLSA before conducting your self-audit.

You will be asked to enter you name and the name of your business at the start of the review. You must review the material presented on each screen before proceeding to the next item. There are a total of 12 screens of materials, including a series of short videos on FLSA topics. Videos are hosted on YouTube so please ensure you are viewing them on a device that supports YouTube.

After you complete the Compliance Assistance Review, the system will generate a Certificate of Completion. Please print the certificate or save it as a pdf, as you will need to present it to WHD with the rest of your documents.

* Required field


If you would like additional information you may visit or bookmark the FLSA Compliance Assistance Library

These materials are for general information and are not regulations.


Conduct Your FLSA Self-Audit

Once you have completed the PAID Compliance Assistance review and generated and saved your Completion Certificate, you must audit your business’s compensation practices. Before moving to the next steps, be sure that you have:

  • Specifically identified the potential violations that may have occurred in the last two years;
  • Identified which employees were affected within the last two years;
  • Identified the timeframes, within the last two years, in which each employee was affected; and
  • Calculated the amount of back wages you believe are owed to each employee.

IMPORTANT: If you pay back wages to your employees before WHD reviews and assesses the back wages owed, those employees will not have waived their rights to pursue a private lawsuit for these potential violations under the FLSA because WHD did not supervise the settlement of these back wages.

When you contact the WHD district office, you will be asked to provide WHD with:

  • The names, addresses, and phone numbers of all affected employees;
  • Your back wage calculations along with supporting evidence and methodology used to make those calculations;
  • Payroll records and any other relevant evidence;
  • Records demonstrating hours of work of each affected employee during the time frame at issue;
  • Records to show that you have corrected the compensation practices to comply with the FLSA;
  • 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 of the program’s information, terms, and compliance assistance materials; and
  • A certification that the employer meets all eligibility criteria of the program.

WHD will then evaluate this information and contact you to discuss next steps, including collecting any other information necessary for WHD to assess the back wages due for the identified violations. If WHD accepts you into PAID, WHD will provide you with the proposed scope of the release of liability for the potential violations presented.


Payment of Wages

After WHD assesses 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 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 for which the employer had paid back wages. Employers are responsible for issuing prompt payment; WHD will not distribute the back wages.

Employers must pay all back wages due by the end of the next full pay period after receiving the summary of unpaid wages, and provide proof of payment to WHD expeditiously.


Contact WHD

Once you review relevant compliance assistance materials, coverage information, and eligibility certifications, and identify compensation practices for your proposed PAID self-audit, please contact your local WHD District Office for further information and a discussion of next steps in the PAID self-audit process.

District Office Map

Please be prepared to speak with WHD about the potential violations you’ve identified, which of your employees were affected, relevant timeframes in which each employee was affected, and the amount of back wages you believe are owed to each employee.