The US Department of Labor’s Wage and Hour Division (WHD) has launched a new pilot programme designed to encourage employers to report their own potential minimum wage and overtime violations.
According to Wage and Hour Law Update, under the Payroll Audit Independent Determination (PAID) initiative, employers that uncover potential wage infringements during a self-audit may voluntarily report them to the WHD. The advantage is that they can then pay any wages due to employees without the usual associated penalties or liquidated damages.
If employers discover any non-compliant, or even questionable, minimum wage or overtime practices, including the misapplication of 'white collar' or other exemptions, they are required to provide the WHD with the identity of affected employees, relevant timeframes and a calculation of the wages owed.
The WHD will check the employer's calculations, notify the affected staff and give them a summary of the wages owed plus the settlement terms. Employers must then pay the wages due no later than by the next usual pay period.
But there are potential risks for employers in taking this approach. Employees are not obliged to accept the proposed settlement terms simply because the WHD has endorsed them - and could resort to the courts.
In addition, employers are not permitted to use the PAID programme to resolve issues that are already being investigated by the WHD, that are already the subject of litigation or arbitration whether actual or threatened, or about which the employer has already been contacted by an employee’s attorney or other representative with a view to settling.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
The US Department of Labor’s Wage and Hour Division (WHD) has launched a new pilot programme designed to encourage employers to report their own potential minimum wage and overtime violations.
According to Wage and Hour Law Update, under the Payroll Audit Independent Determination (PAID) initiative, employers that uncover potential wage infringements during a self-audit may voluntarily report them to the WHD. The advantage is that they can then pay any wages due to employees without the usual associated penalties or liquidated damages.
If employers discover any non-compliant, or even questionable, minimum wage or overtime practices, including the misapplication of 'white collar' or other exemptions, they are required to provide the WHD with the identity of affected employees, relevant timeframes and a calculation of the wages owed.
The WHD will check the employer's calculations, notify the affected staff and give them a summary of the wages owed plus the settlement terms. Employers must then pay the wages due no later than by the next usual pay period.
But there are potential risks for employers in taking this approach. Employees are not obliged to accept the proposed settlement terms simply because the WHD has endorsed them - and could resort to the courts.
In addition, employers are not permitted to use the PAID programme to resolve issues that are already being investigated by the WHD, that are already the subject of litigation or arbitration whether actual or threatened, or about which the employer has already been contacted by an employee’s attorney or other representative with a view to settling.
Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.
