Another Bites the Dust -- Trump's PAID Program Dies

“And another one gone and another one gone, Another bites the dust”

– Queen

One of the more controversial policies leftover from the Trump administration was disbanded soon after President Biden took over. On January 29, 2021 the Payroll Audit Independent Determination, or the PAID program, was disbanded by U.S. Department of Labor (“DOL”). The program was instituted in 2018 by the Wage and Hour Division (“WHD”) of the DOL to resolve accidental overtime and minimum wage violations of the Fair Labor Standards Act. Abrahams Wolf-Rodda wrote a blog about it almost three years ago. See https://www.awrcounsel.com/blog/2018/4/13/the-paid-program-under-the-flsa-everything-old-is-new-again?rq=PAID.

The PAID system was created to encourage employers to self-report wage and hour violations. The DOL would then oversee the settlement with the employer’s workers and supervise the payment of back wages. The PAID program would allow employees to benefit from voluntary reporting and most likely receive their back wages earlier than if they had to institute an action for back wages themselves. It also would allow the employees and the employer to avoid court fees and attorneys’ costs. In addition, the WHD decided it would not impose penalties and liquidated damages which are usually standard in actions for back wages under the FLSA.

However, President Biden’s WHD ended the program with WHD Principal Deputy Administrator Jessica Loom saying, “Workers are entitled to every penny they have earned”. The new administration found issue with the possibility that affected workers would no longer be able to pursue the penalties and liquidated damages that they would likely have been able to receive if they instituted an action in court. WHD also wrote that the program would put employers that play be the rules at a disadvantage. DOL believes that the variety of educational resources available through their website and over the phone is enough to prevent wage and hour violations, and the PAID program was therefore superfluous for the majority of employers who intended to follow the rules.

The PAID program wasn’t the safe harbor that it seemed for many employers. An employee did not have to accept the settlement offered by the employer and could have gone to court anyway. In addition, if they did accept the settlement, the still could have pursued any state law claims that they had under the same set of facts. As such, there was still a certain amount of risk for employer to self-report their own violations, inadvertent or otherwise.

 In a July 2020 press release, DOL found that PAID actions found more than four times the back wages of traditional investigations on average. In addition, it found more than 10 times the back wages per WHD staff hour invested. WHD Press Release Number 20-1061-NAT. Many suggest that the WHD has been understaffed in recent years and it seems as if the program helped accomplish at least some of its goals. Regardless, DOL found that the program was counterproductive in reaching its goals and did away with it. Considering DOL’s attitude towards not pursuing liquidated damages, it is strange that DOL has yet to rescind their Field Assistance Bulletin 2020-2, stating that WHD will not assess pre-litigation liquidated damages in a variety of circumstances. However, I would expect that in coming months considering how active this new administration has been.   

To read the press release announcing the end of the PAID program you can view it here: https://www.dol.gov/newsroom/releases/whd/whd20210129.