Self-Auditing for Compliance: Using the DOL’s PAID Program to Address Wage and Leave Violations

The U.S. Department of Labor offers an opportunity for employers to identify and correct wage and leave practices that may be out of step with federal law. Through the Payroll Audit Independent Determination (PAID) program, employers can partner with the Wage and Hour Division (WHD) to resolve potential violations under the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA) without going through litigation.

This voluntary self-audit process can help employers correct mistakes, pay back wages, and implement other remedies, while working with WHD in good faith and demonstrating a commitment to future compliance.

How PAID Works

Employers who participate in the PAID program follow a structured process:

1. Conduct a self-audit Employers should review compliance materials and identify specific FLSA or FMLA violations, which employees were affected, when the violations occurred, and what remedies are owed. For FLSA issues, this includes calculating back wages such as minimum wage or overtime pay. For FMLA issues, it may include restoring leave balances or revising internal processes.
2. Report findings to WHD The employer submits their findings, supporting documentation, and a brief statement outlining the scope of potential violations. They must also certify that they reviewed and meet the program’s eligibility requirements.
3. WHD review and feedback WHD evaluates the employer’s materials and may request more information. If the submission is approved, WHD provides guidance on the scope of a release and next steps for resolution.
4. Payment and implementation of remedies The employer must pay any back wages or implement other remedies within 15 days of WHD’s final review. Employers must provide proof of payment and documentation of any changes made.

Employees can choose whether to accept the settlement payment. If they decline, they retain their right to pursue private claims. Employers are prohibited from retaliating against employees who do not accept a settlement.

Eligibility for the PAID Program

To participate, employers must be covered by the FLSA or FMLA and willing to commit to correcting the issues and maintaining future compliance. Employers are not eligible if they are currently under investigation for the same issues or involved in litigation about the practices at issue. PAID is not available for violations involving visa programs or certain federal wage laws like the Davis-Bacon Act.

The WHD reviews eligibility on a case-by-case basis and reserves the right to decline participation.

Certification Requirements

Before submitting a self-audit, employers must complete a compliance review for either FLSA or FMLA, depending on the type of issue being reported. The review includes educational videos and generates a certificate of completion to include with the submission.

Benefits for Employers

By using PAID, employers can:

• Proactively address potential compliance issues
• Demonstrate good faith in correcting violations
• Avoid costly and time-consuming litigation
• Resolve back pay or leave issues efficiently and with WHD support

Key Considerations

Employers must not begin making payments or corrections before WHD has reviewed and approved the submission. Doing so may prevent the settlement from being recognized as valid under the FLSA or FMLA. Additionally, participating in PAID does not limit employee rights under other state or local wage and leave laws.

Learn More

HR teams interested in exploring PAID can visit the Department of Labor’s website or contact WHD at 1-866-4US-WAGE. Resources include compliance materials, fact sheets, FAQs, and sample certification checklists.