“On the one hand, it frees employers from penalties and the costs of litigation. On the other, it requires employers to make very prompt restitution of back wages.”
PITTSBURGH (PRWEB) October 02, 2018
In March of this year, the Wage and Hour Division of the U.S. Department of Labor announced a new pilot program, the Payroll Audit Independent Determination Program (PAID), designed to expedite resolution of overtime and minimum wage violations under the Fair Labor Standards Act (FLSA). The PAID program facilitates resolution of wage violations without litigation; under the program, the Wage and Hour Division assesses the amount of wages due and facilitates their payment to employees.1 “So far,” says Cowden Associates President and CEO Elliot Dinkin, “the program seems to be doing what it was intended to do.” Dinkin, a nationally known expert in actuarial, compensation, and employee benefits issues, adds, “On the one hand, it frees employers from penalties and the costs of litigation. On the other, it requires employers to make very prompt restitution of back wages.”
To take advantage of the PAID program, an employer must complete a self-audit of its compensation practices and provide the Labor Department with:
- A calculation of back pay owed to affected employees, with an explanation of how the calculation was made;
- An explanation of the scope of the violations that would be included in a release of claims;
- A certification that the employer has reviewed all compliance assistance information and materials supplied by the Department;
- A certification that the violations at issue are not the subject of current or threatened litigation, arbitration, or other dispute resolution; and
- A certification that the employer will correct the practices that led to the identified violation(s).2
An expedited process with a release of legal claim can, Dinkin notes, have advantages for both employers and employees. This is particularly true for certain industries that have complex compensation arrangements such as the restaurant industry. For example, a recent joint settlement was reached with employees covering lost wages, unpaid overtime, damages, and all attorney’s fees—after two years of litigation.3 “Under PAID,” Dinkin points out, “restoration of lost wages is required to be made by the next pay period following settlement.”
Initial reaction to the PAID program was mixed. One commentator in Washington hailed it as “a win for employers, a win for employees, and a win for taxpayers.”4 In a letter to Labor Secretary Alexander Acosta, however, Senator Elizabeth Warren of Massachusetts and several colleagues said, “Letting violators off the hook for wage theft penalties tilts the economic playing field even further against workers.”5
Dinkin, dissents noting that it is purely the employees’ choice whether to accept the payment of back wages due, and that in doing so the employee does not, in fact, grant a broad release of all potential claims under the FLSA. “The PAID program,” says Dinkin, “should be evaluated like any other option: are the benefits greater than the risks? It may prove to be an effective approach to correcting an FLSA defect for overtime and/or minimum wage violations. Meanwhile, we encourage employers to continue to evaluate their pay programs to ensure compliance with a variety of federal and state regulations, including internal and external pay equity.”
About Cowden Associates:
Cowden Associates, Inc., headquartered in Pittsburgh, PA, was created in 2001 by the merger of Halliwell and Associates and MMC&P Spectrum Benefits, which was founded by Jere Cowden in 1986. Currently led by President & CEO Elliot Dinkin, Cowden Associates specializes in helping corporate clients find the best solutions, both for the enterprise and for its employees, with regard to compensation, healthcare benefits, retirement and pension issues, and Taft-Hartley fund consulting. Winning Workplaces and The Wall Street Journal have recognized Cowden Associates as a “Top Small Workplace,” a lifetime designation awarded to executives for their ability to build and lead savvy organizations. For more information, visit http://www.cowdenassociates.com
1. “U.S. Department of Labor Announces New Program to Expedite Payment to American Workers,” U.S. Dept. of Labor, March 6, 2018.
2. “DOL Announces New Program to Encourage Voluntary Identification and Correction of Wage/Hour Violations,” Skoler Abbot, March 13, 2018.
3. Morris, Samantha, “Tip Laws a Source of Costly Confusion for Restaurants and Employees Alike,” Houston Food Finder, September 14, 2018.
4. Jarrett, Bryan, “Dept. of Labor’s new PAID program a win-win-win for employers, taxpayers, employees,” The Hill, March 6, 2018.
5. Khimm, Suzy, “Warren, Democrats slam Trump for letting employers off the hook, call it ‘wage theft’ program,” NBC, August 22, 2018.