Plagued with payroll problems

By: Michelle Higgins

Publication: Benefits & Compensation Regulatory Alert

Date Posted: 11/30/2020

Payroll Audit Independent Determination (PAID)Program Explained

Sometimes employers just need a break. This past summer they got one. The Department of Labor’s (DOL) Wage and Hour Division (WHD) issued a Field Assistance Bulletin (i.e., a document to provide guidance to WHD field staff) stating that effective July 1, 2020, they won’t assess liquidated damages in pre-litigation settlements (i.e., fines on top of back pay, or “double damages”) during wage and hour investigations if any one of the following circumstances exist:

  • there is not clear evidence of bad faith and willfulness;
  • the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;
  • the employer has no previous history of violations;
  • the matter involves individual coverage only;
  • the matter involves complex exemptions; or
  • the matter involves state and local government agencies or
    other non-profits.

That’s good, right? Well, what if you’ve missed payroll once or twice during the pandemic? If your payroll practices are less than stellar, consider doing a self-audit, coming clean, and fessing up to the government. No, I’m not crazy.

There is a federal program called the Payroll Audit Independent Determination (PAID) program which provides a framework for proactive resolution of potential overtime and minimum wage violations under the FLSA.

The gist of the program is that it allows employers and employees to resolve wage claims quickly and without litigation. Additionally, although the WHD will require payment of all back wages due, they will not require additional payment of liquidated damages or civil monetary penalties when employers choose to participate in the program and proactively work with the WHD to fix and resolve the compensation practices at issue.

Basically, it’s like when parents of teenagers say, “Why didn’t you just come to me first? We could have worked it out together.” Instead, after teenagers mess up, they try to sweep mistakes under the rug (bad grades, speeding tickets, fender benders … you get my drift).

It’s essentially the same concept here. The WHD wants to help teenagers employers fix their wage and hour messes instead of grounding fining them. Check it out.

About the author
Michelle Higgins - Human Resources Editor

Michelle Higgins is an Associate Editor on the Human Resources Publishing Team and she creates content on a variety of employment-related topics including benefits, compensation, overtime, wage deductions, exempt/nonexempt employees, health and retirement plans, independent contractors, and child labor.

Expert Help Icon

Have a compliance question for Michelle? The J. J. Keller Expert Help tool provides you direct access to Michelle and other trusted experts to help answer your toughest compliance questions.