
The
estimated start date for the PAID program is April of 2018. Here is what we currently
know about the parameters of this new program:
1) To
participate, employers must first review the requisite information about the
program and compliance assistance materials, all of which will be available on
the DOL’s website.
2) After the
review, employers must audit their compensation practices for potentially noncompliant
practices.
3) If an employer
discovers any noncompliant practices, or if an 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.
4) After
taking the above steps, the employer would contact the DOL to discuss a
resolution of the matter at hand. The employer will be required to submit specific
information to the DOL, including the calculations described above, a concise
explanation of the scope of the potential violations, and employer
certifications about the information and the corrections made by the employer.
5) The
DOL will then assess the information provided by the employer, issue a summary
of unpaid wages, and issue forms describing the settlement terms. Employers
will pay all back wages to the employee by the end of the next full pay period.
Because this
is a pilot program, we do not yet know how this program will actually impact
employees and employers. While the PAID program provides incentives for
employers to participate (avoiding potential liquidated damages, civil
penalties, and attorneys’ fees), the program’s actual and full impact on
employers remains unknown. For instance, while the program provides for an
employer to obtain a release of FLSA claims from participating employees in
exchange for payment from the employer, it is not clear whether the DOL will
allow that release to be extended to encompass other claims, such as those that
would exist under state wage payment and collection laws. If the state laws are
not released, the employer may still be subject to additional liability risks. Additionally,
there could be risks associated with providing noncompliance data to the DOL
should the employer’s actions not result in a final settlement for some reason.
Therefore, we recommend that employers who believe they may be out of
compliance with the FLSA consult with counsel before considering and deciding
on participation in the PAID program.
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