On July 24, 2025, the U.S. Department of Labor (DOL) announced that it would reinstate the Payroll Audit Independent Determination (PAID) program. The updated initiative now allows employers to voluntarily self-report and correct unintentional violations of the Fair Labor Standards Act (FLSA) as well as certain violations of the Family and Medical Leave Act (FMLA).
Through participation in the program, eligible employers may correct errors, provide back pay to affected employees, and avoid civil monetary penalties and liquidated damages that would otherwise result from an agency investigation or lawsuit.
Below is an overview of the updated program, along with considerations for employers when assessing the appropriateness of their participation.
Overview of the Relaunched PAID Program
The PAID program, first launched in 2018 and discontinued in 2021, has been reinstated with an expanded scope and additional compliance safeguards. The program is intended to promote self-correction of wages and leave violations in good faith and in coordination with the DOL.
Employers who qualify may voluntarily:
- Conduct a self-audit of pay practices or FMLA administration.
- Disclose identified violations to the DOL.
- Collaborate with the DOL to resolve those violations.
- Provide full payment of any back wages owed within 15 days of the DOL’s determination.
Key Features of the PAID Program
- Expanded Scope. The updated program now applies to certain FMLA-related violations, such as failure to reinstate employees following leave or failing to designate eligible leave appropriately, in addition to standard FLSA compliance issues such as minimum wage, overtime pay, and recordkeeping violations.
- Eligibility Requirements. Employers must certify that:
- There is no ongoing DOL investigation involving the relevant issue(s);
- The employer has not previously used PAID to resolve the same violations;
- The violations were inadvertent and not repeated or willful; and
- All affected employees will be paid back wages in full and promptly.
- Collaborative Resolution. Employers submit a detailed summary of the violations and supporting documentation to the DOL. After review, the DOL provides a summary of unpaid wages and release forms for employees to sign. Back wages must be paid within 15 days of issuance.
- No Protection from State Claims. Participation in PAID does not shield employers from wage or leave claims brought under state or local laws. Employers must separately assess their exposure and compliance at the state and local levels.
Considerations Under State and Local Laws
Although PAID resolves specific federal compliance issues, it does not preempt or override requirements imposed by state or local wage and hour or leave laws. Employers must take independent steps to ensure full compliance across all applicable jurisdictions.
Next Steps for Employers
Employers interested in participating in the PAID program should consider taking the following actions:
- Evaluate Eligibility: Confirm that there are no ongoing DOL investigations or prior PAID participation for the same violations, and ensure all issues were unintentional and isolated.
- Conduct a Comprehensive Self-Audit: Review wage and hour practices, FMLA administration, and timekeeping systems for compliance with FLSA, FMLA, and applicable state laws.
- Coordinate with Legal Counsel: Engage legal advisors to review identified violations, calculate back wages, and assess risk under state and local laws before submitting findings to the DOL as this program may not be the best approach to cure all situations.
- Prepare Required Documentation: Compile supporting records, summaries of violations, employee lists, and back wage calculations in accordance with DOL guidelines.
- Remediate Promptly: Be prepared to issue payment of back wages within 15 days of the WHD’s final determination and ensure future compliance through training and system improvements.
- Review State and Local Law Obligations: Identify whether the same violations would trigger liability under state or local rules and take separate action as necessary to address those obligations.
