The federal Department of Labor (DOL) officially revived the Payroll Audit Independent Determination (PAID) Program, a voluntary compliance initiative that had been dormant since 2021. Originally launched in 2018, the PAID Program was designed to help employers proactively correct wage and hour violations under the Fair Labor Standards Act (FLSA). The updated version now also includes violations under the Family and Medical Leave Act (FMLA).
The PAID program offers employers an opportunity to address potential wage or leave violations without the risk or burden of litigation. If your organization suspects it may have underpaid employees or mishandled leave entitlements, you can voluntarily conduct a self-audit and work with the DOL toward resolutions which may include paying back wages and making other changes to your policies.
Despite these benefits, employers should proceed with caution: participation in the PAID Program does not shield you from liability under state or local laws, and employees are free to reject back wages offered through the program in favor of pursuing legal action under New Jersey’s wage and hour laws. For example, under New Jersey’s Wage Theft Act – which has a six-year statute of limitations - employees who prove their employer acted with willful or reckless disregard of the law would be entitled to liquidated damages up to 200% of the wages due.
It’s also important to note that participation in the PAID Program is not anonymous. Businesses must formally apply and identify themselves to the DOL, and there is no guarantee of acceptance. If accepted, you’ll be required to certify compliance with either the FLSA or FMLA, depending on the nature of the violations.
Given the complexity and potential legal exposure, EANJ encourages employers to consult with legal counsel before deciding to participate. A well-executed self-audit can help you identify and correct issues before they escalate, but employers must undertake the audit carefully and with a full understanding of the PAID Program’s limitations and requirements.