New Program Allows Employers to Report Potential Wage Violations

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By Christine Pulfrey

A nationwide pilot program to allow employers to report themselves for potentially violating overtime and minimum wage laws was unveiled March 6 by the Labor Department.

The Payroll Audit Independent Determination self-auditing system is to start soon and run for six months before it is reviewed to determine changes and whether to make it permanent, the department said in a news release and on its website. By reporting potential violations, employers likely would avoid large fines, the department said.

The program is intended to quickly resolve wage and hour claims without lawsuits and to improve employers’ compliance with minimum wage and overtime requirements under the Fair Labor Standards Act, including off-the-clock work and worker misclassification, the department said.

“Right now, if a company is aware of a mistake, there is no simple mechanism for them to come forward and say we made a mistake, we want to voluntarily come forward and pay our back wages,” Labor Secretary Alexander Acosta said March 6 at a House subcommittee hearing on the Labor Department budget.

Under the program, the department’s Wage and Hour Division is to assess the amount of wages owed and then supervise payment of back wages to employees without other costs, such as attorneys’ fees, Acosta said.

FLSA-covered employers are eligible to participate in the pilot, the department said, noting that participating companies that report violations and work to resolve issues would not have to pay civil penalties.

To participate, employers must review the program information that the department is to make available on its website and then audit payment practices for potential noncompliance, the department said.

Employers must identify potential violations, affected employees, and the time periods when employees were affected. The amount of back wages that may be owed to each employee would have to be calculated before employers contact the Wage and Hour Division to request participation.

The Wage and Hour Division would advise eligible employers how to submit information, including related calculations accompanied by evidence and explanations, and certifications that program information was reviewed.

Employers would have to ensure that related compensation practices were not being litigated or arbitrated, and that policies would be adjusted to avoid similar potential violations. The program may not be used to resolve issues under investigation by the division or to resolve repeated violations, the department said.

The division would issue a summary of unpaid wages and forms describing settlement terms that employees must sign to receive payments, which would be made by the next full pay period after receiving the summary of unpaid wages. Proof of payment also must be provided to the division.

To contact the reporter on this story: Christine Pulfrey in Washington at cpulfrey@bloombergtax.com. To contact the editor on this story: Michael Baer at mbaer@bloombergtax.com.

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