Department of Labor Reinstitutes the Payroll Audit Independent Determination (“PAID”) Program

Department of Labor Reinstitutes the Payroll Audit Independent Determination (“PAID”) Program

Bayan Biazar, Associate

       On July 24, 2025, The Department of Labor’s (“DOL”) Wage and Hour Division (“WHD”) reinstated the Payroll Audit Independent Determination Program (“PAID” or the “Program”). PAID is designed to help the employers using it to resolve potential minimum wage and overtime violations under the Fair Labor Standards Act (“FLSA”) and violations under the Family and Medical Leave Act (“FMLA”) before any lawsuits based on said violations are instituted. PAID gives employers the ability to conduct self-audits of their pay practices and work with the DOL’s WHD to cure any wage-related pay mistakes or omissions and ensure that employees receive their back wages, or other remedies, prior to litigation ensuing.  If an employer wishes to dispute the alleged wages owed to an employee, it cannot utilize the PAID Program.

How PAID Works

       PAID consists of  four steps.[1] First, employers self-audit their pay practices to ensure they are compliant with FLSA and/or FMLA. The WHD suggests that employers conduct this self-audit by reviewing such things as federal compliance assistance materials; identifying potential wage-related violations (including the amount of back wages owed) and the employees affected by the violation; and identifying any FMLA-related remedies that are necessary for compliance. Second, employers then contact and report to the WHD the results of the self-audit. As a part of this reporting, employers are required to submit a concise statement of the scope of their potential violations which will be included in a release of liability. At this time, employers are also required to certify that they reviewed and met all of PAID’s requirements. Third, the WHD reviews the submission and provides guidance to employers on the next steps they must take, if any, to cure any wage violations. Fourth, employers pay any outstanding back wages and/or perform any other remedies within 15 days of receiving the summary of unpaid wages from the WHD. As a part of the fourth step, employers are also required to submit proof of payment and documentation of other remedies to the WHD. 

Why an Employer Might Use PAID

            For some employers, PAID could be a useful tool to avoid the uncertainties and expenses associated with FLSA and FMLA-related litigation,[2] if there is a known violation. The Program allows employers the opportunity to avoid potential civil-money penalties or liquidated damages that could result from litigation. PAID also removes a degree of culpability out of the wage-violation equation. The Program is innately designed for employers who discover and want to fix unintentional compliance issues and act in good faith towards their employees.

           Another part of this Program which might appeal to employers and employees alike is that, on its face, PAID offers a speedy and streamlined process for employers to correct and provide restitution to their employees and from an employee standpoint, they may be able to get back wages that are owed to them quicker than through litigation.

Employer Considerations

             It is important to note that the Program does not absolve employers of compliance-related liability under state or local laws. If an employer is already under investigation for wage-related violations, has used the Program within the three years of their most recent attempt to use the Program, or is a named-party in wage violation litigation, they cannot use the Program. Moreover, PAID requires that employers pay all affected employees back wages in full. If an employer wishes to dispute its employee’s entitlement to back wages, that employer cannot do so through PAID. Another key factor for employers to consider is, when providing back pay to their employees, only claims specifically addressed and covered by PAID are released. The WHD asks employees who are set to receive back wages under PAID to waive recovery of liquidated damages, but no part of PAID obligates an employee to do so. Campbell Litigation will continue to monitor the Program and its effects on the changing landscape of wage-related employment practices and is available to assist any employers with compliance with PAID, FLSA, or FMLA. 

[1] See https://www.dol.gov/agencies/whd/paid for a full discussion on the PAID Program.

[2] See id. for a detailed discussion on what employers can participate in the PAID Program.