Wage and Hour Division (WHD)
Questions and Answers About the PAID Program
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?
- How long will the pilot program run?
- Who can participate in this pilot 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 the PAID program?
- 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 the PAID program 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 assesses the back wages due, what happens next?
- What happens if employers refuse to pay the back wages due after WHD makes its determinations?
- By when must employers pay the back wages to employees?
- How long should employers and employees expect the process to take?
- What effect, if any, will employers’ participation in the program have on potential claims arising under state law?
- Is data or information provided to WHD in connection with the PAID 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
1. How is PAID a win for employees?
Employees deserve the wages they earn. When employers make mistakes, the PAID program helps employees receive their overtime and minimum wages as quickly as possible. The PAID program 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, without having to pay any litigation expenses or attorneys’ fees.
To benefit employees moving forward, the program requires employers to review WHD’s compliance assistance materials, carefully audit their pay practices, and agree to correct the pay practices at issue.
2. How is PAID a win for employers?
The PAID program provides a framework for proactive resolution of potential overtime and minimum wage violations under the FLSA. The program allows employers and employees to resolve such claims expeditiously and without litigation. Additionally, although WHD will require payment of all back wages due, WHD will not require additional payment of liquidated damages or civil monetary penalties when employers choose to participate in the program and proactively work with WHD to fix and resolve the compensation practices at issue.
3. 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.
4. How long will the pilot program run?
WHD will implement this pilot program nationwide for approximately six months. At the end of the pilot period, WHD will evaluate the effectiveness of the pilot program, and whether to make the program permanent.
5. Who can participate in this pilot program?
All FLSA-covered employers are eligible to participate in the pilot.
Government entities may also participate in the pilot, but they must pay monetary back wages to affected employees rather than offering, for example, compensatory time.
6. 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 any issues for which WHD is already investigating the employer, or which 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.
Also, employers cannot use the program to repeatedly resolve the same violations, as this program is designed to identify and correct non-compliant practices.
7. What if an affected employee files a lawsuit without knowing that the employer is already participating in the PAID program?
If an employer is already participating in the program before receiving specific 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.
8. What types of violations does this program address?
This program covers potential violations of the FLSA’s overtime and minimum wage 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 misclassification of employees as exempt from the FLSA’s minimum wage and overtime requirements.
9. 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 the PAID program, then WHD will not have supervised the payment and the employer will not be eligible to resolve the underlying violations in the program.
10. Can an employer participate in the program if it did not keep records of the hours its employees worked?
Yes. WHD maintains its discretion to accept or refuse cases that require reconstruction of records.
11. Does this program require employees to participate?
No. Employees may opt to accept the payments offered or they may reject them and retain all of their rights. It is purely the employee’s choice whether to accept the payment of back wages due, and employers are prohibited from retaliating against the employee for his or her choice.
If the employee chooses to not accept the payment, the employee will not release any private right of action. Additionally, if the employee chooses to accept the payment, releases are limited to the identified violations and time period for which the employer is paying the back wages.
The PAID program does not waive WHD’s right to conduct any future investigations of the employer.
12. 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 of 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 accept the payments and release their rights to privately sue the employer for the unpaid wages.
How Does the Program Work?
1. 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/whd/paid/. This material not only helps employers understand the program, but also helps them more fully understand their minimum wage and overtime obligations under the FLSA before conducting their self-audit.
After reviewing the materials, employers must then audit their compensation practices for potentially non-compliant practices. If the employer discovers any non-compliant practices, or if the employer believes its compensation 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.
2. 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:
- each of the calculations described above—accompanied by both evidence and explanation concerning how the calculations were made;
- 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 information, terms, and compliance assistance materials;
- a certification that the employer is not litigating the compensation practices at issue 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; and
- a certification that the employer will adjust its practices to avoid the same potential violations in the future.
3. What happens after the employer provides the requisite information and acknowledgments?
WHD will then evaluate the 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 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.
4. 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 the PAID program, 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 due for the potential violations the employer identified. If WHD discovers additional minimum wage or overtime issues outside the scope of the employer’s proposal, WHD will ordinarily attempt to resolve them as part of the audit.
5. Does the PAID program require employers to include former employees in their back wage calculations?
Yes. Like any other WHD enforcement action under the FLSA, back wages are computed for all employees affected within the statute of limitations, regardless of whether they are current or former employees.
6. 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 the PAID program is designed to facilitate this process. Similarly, WHD wants to work with good faith employers through the PAID program to resolve inadvertent violations of FLSA minimum wage and overtime requirements. If WHD declines an employer’s request to participate in the program, the employer’s request to participate will not serve as the basis for a future investigation, unless WHD has reason to believe that health or safety are at risk (for example, if there are child labor violations).
7. After WHD assesses the back wages due, what happens next?
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.
8. What happens if employers refuse to pay the back wages due after WHD makes its determinations?
WHD will work with good faith employers to help affected employees get paid faster. In the event an employer refuses to pay the back wages due, WHD may use its enforcement authority to recover those wages.
9. By when must employers pay the back wages to employees?
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.
10. How long should employers and employees expect the process to take?
WHD expects that audits conducted under the PAID program will typically take fewer than 90 days to complete.
11. What effect, if any, will employers’ participation in the program have on potential claims arising under state law?
WHD may not supervise payments or provide releases for state law violations. The PAID program does not preclude an employer from separately settling claims as allowed under state law.
12. Is data or information provided to WHD in connection with the PAID program subject to the Freedom of Information Act (FOIA)?
Self-audits under the PAID program are subject to the same FOIA requirements and defenses as any WHD investigation or audit.
13. 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.