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The Department of Labor (DOL) is expanding a series of programs that allow employers to report and correct workplace violations to avoid formal investigations or lawsuits.
The Biden administration had discontinued one such program, which focuses on payroll violations, over concerns it violated workers’ rights and disincentivized employers from following the law. That program will now be revived, giving employers the opportunity to resolve violations under both the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA).
Why the Trump administration is encouraging self-audits. The DOL highlighted six agencies under its direction that are launching, continuing, or expanding self-audit programs, including the Employee Benefits Security Administration, the Occupational Safety and Health Administration (OSHA), and the Wage and Hour Division (WHD).
In a statement issued regarding the agency’s self-audit programs, Deputy Secretary of Labor Keith Sonderling said the programs were intended to give employers the tools “to correct potential violations proactively.” The practice of self-auditing, he added, is “one of the most effective ways to build a culture of compliance and trust.”
The WHD’s Payroll Audit Independent Determination (PAID) program, which launched in 2018, allows employers to identify potential minimum wage, overtime, and leave violations. If they report violations to the WHD and correct them by paying workers back wages, for example, they may avoid formal investigations or litigation, according to the DOL.
When the Biden administration discontinued the PAID program in January 2021, Wage and Hour Division Principal Deputy Administrator Jessica Looman cited concerns that the program barred workers from suing their employers over such violations. “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage,” she said in a statement.
What HR should know. The revived PAID program allows employers to report and correct a broader range of violations, as it applies to both the FLSA and the FMLA (the latter wasn’t previously covered).
Only employers without a history of FLSA or FMLA violations within the last three years may participate in the program, according to the DOL. They also can’t be subject to any investigations or lawsuits alleging violations of these laws, and must inform the WHD of any complaints they’ve received from workers regarding potential violations. Businesses participating in the PAID program must pay back wages owed to their workers within 15 days after receiving a summary of unpaid wages from the DOL, and also provide proof they have done so to avoid a formal investigation or litigation.
While this program provides an opportunity for HR teams to get ahead of potential payroll or leave violations at their workplaces, it’s important to note that it doesn’t supersede state or local laws. In states where the statute of limitations for wage claims is longer—such as New York or Massachussetts—businesses could open themselves up to lawsuits by disclosing violations to the federal government, Fisher Phillips attorneys noted.
This marks the latest move by the DOL to ostensibly encourage compliance while easing up on penalties for employers. In June, the agency announced it was expanding its opinion letter program to guide employers on compliance, and in July the DOL said it would make it easier for small businesses to reduce fines they incur for violating the law.
The DOL also recently announced it will no longer seek liquidated damages in settlements concerning wage or overtime violations under the FLSA.