When the USDOL self-reporting program was announced, I was highly skeptical. Even though there seemed to be assurances that no undue enforcement actions would be taken, it just did not seem that employers would voluntarily subject themselves to such government review. Evidently, I was right. The USDOL has announced that this voluntary compliance program, the Payroll Audit Independent Determination (“PAID”) has produced a paltry $7 million in wages due employees.

The program ostensibly protects employers if they commit inadvertent overtime and minimum wage violations, provided the employer admits the mistake and pays the workers all they are owed. Its detractors argued that the program denied workers the chance to seek greater damages through the normal channels, such as a private lawsuit (individual or collective action) or a more aggressive USDOL audit.

The statistics show that fewer than 100 employers entered the program. Through May 2019, approximately 11,000 workers received back due wages that totaled the $7 million. By contrast, the agency recovered $450 million in back wages through the normal agency enforcement mechanisms. One reason for the reluctance is that employers feared that state Departments of Labor would come after them if they admitted their “guilt” to the federal DOL. This specter makes it far too dangerous for an employer to come forward and enter the PAID. As Paul DeCamp observed, “I think it created an atmosphere where employers are quite rightly concerned that if they settle a matter through the PAID program and their state attorney general hears about it, the employer should expect a visit from state enforcement personnel.”

The counter to this position is that if workers reject the sums that the employer has calculated it owes them, under the program, these workers can then avail themselves of traditional recovery methods. As Patricia Smith, counsel for National Employment Law Project notes, “if they go out and find an attorney who will sue them, they’ve already admitted to not paying overtime, they’ve already admitted to a violation, and all the worker has to do is prove a difference in the number of hours.” She added that the reluctance to join the program is tied to employers “not wanting to admit violations, no matter how minor.”

The Takeaway

I do believe that the intention of the program is laudable. It represents a streamlined method of making sure that underpaid workers receive their wages in a more prompt manner than a long agency investigation or a protracted litigation. But, the worthy goals of the program have not been able to overcome the inherent employer fear that “coming clean” to the government will open a giant Pandora’s Box of further wage-hour problems.

Better safe than sorry…