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By Ben Penn
Businesses can soon report overtime and minimum wage violations and avoid litigation, under a new initiative the labor secretary unveiled at a congressional hearing March 6.
“Employees will receive 100 percent of back wages owed, without the costs of attorney fees,” Labor Secretary Alexander Acosta told House appropriators. “This will be reserved for companies that realize their mistakes, and they come forward. The intention is to get the money owed” to workers faster, he said.
Starting in one month, the department plans to launch a pilot self-reporting program for about six months and then decide whether to continue the initiative, according to a DOL spokesman.
The move from the DOL’s Wage and Hour Division advances the administration’s efforts to improve cooperation with employers by using a carrot instead of a stick. This marks another change in direction from the DOL under President Barack Obama. That administration emphasized thorough, targeted workplace investigations, frequently assessing double damages to make workers whole.
Companies occasionally self-reported wage violations in the George W. Bush administration, sometimes leading to multimillion-dollar recoveries, before the program was disbanded under Obama. Worker advocates have criticized similar programs in the past, saying they may deny workers the chance to get double damages or a full three years of back pay that could arise from a full Wage and Hour Division investigation.
The key sweetener for businesses to turn themselves in, at least in the Bush era, was that employees accepting the paychecks would then waive their right to private action.
Starting in the Obama White House, companies were still welcome to self-report but not with an assurance that WHD wouldn’t investigate. Employers rarely, if ever, did. That administration’s position was that it wouldn’t abdicate its right to conduct a full, independent investigation after an employer came forward.
“That was definitely not the approach that we took and it’s not one that I would support taken,” Laura Fortman, an acting WHD administrator under Obama, said in 2017 of the potential to restore self reporting. “The Wage and Hour Division is often the agency of last resort for these employees, and you need to make sure that you’re doing a thorough investigation and making sure that they receive all of the back wages that they are due,” she told Bloomberg Law at the time.
The WHD stated in its program overview that employers cannot self-report when they are already under investigation for wage violations and that the division retains the right to investigate reporting companies in the future. Further, workers are only waiving their right to private action connected to the violations and time period that the employer is reporting, the division said.
The Labor Department’s WHD has recovered more than $1.2 billion in back wages for unpaid minimum wages and overtime in the last five years, according to the department.
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