State Attorneys General: Federal Back Pay Program Hurts Workers

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Porter Wells

A federal program meant to help businesses more quickly settle wage disputes with their workers is under fire in an April 11 letter from 11 state attorneys general.

The Payroll Audit Independent Determination (PAID) program is a self-reporting pilot program out of the Labor Department’s Wage and Hour Division. It is intended to be part of a return to a more business-friendly environment at the DOL. Management lawyers have said, however, that they are skeptical about participating in the program.

That’s in part because the DOL can’t force workers to waive their state wage and hour rights in return for back pay as part of the self-reporting program. The department only has the authority to get workers to waive federal rights. In a state like New York, where wage and hour laws are more aggressive than federal requirements, participating in the program may tip workers and plaintiffs’ lawyers to possible violations.

The PAID program “releases employers from the obligation to pay liquidated damages, interest, or penalties,” which is troubling for states with stricter wage and hour policies, the letter says. The program further invites employers to “obtain employee waivers” of potential state law claims, the letter says. The labor department, however, only has the authority to ask workers to waive their federal law claims.

Representatives for the Labor Department weren’t immediately available to comment.

New York Attorney General Eric Schneiderman penned the letter to Labor Department Secretary Alexander Acosta. The other attorneys general who signed are from California, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Pennsylvania, Washington, and the District of Columbia.

—Chris Opfer contributed to this story.

Request Labor & Employment on Bloomberg Law