The PAID program allows business owners to correct minor employment law violations before paying a penalty fee
On Jan. 31, 2022, NFIB sent letters of support for the U.S. House and Senate versions of the Ensuring Workers Get PAID Act of 2021. This legislation would restart the Department of Labor’s (DOL) Payroll Audit Independent Determination (PAID) program, which allowed small businesses to correct minor wage and hour violations before being penalized.
The PAID program was first launched in 2018 as a six-month trial for employers and employees to resolve Fair Labor Standards Act (FLSA) disputes. The program allowed employers to conduct self-audits of their payroll and self-report any violations they discover to the Wage and Hour Division (WHD). Employers then worked with WHD to correct their mistakes and provide any back wages due to the affected employees.
For employers, this process effectively aims to resolve wage and hour claims quickly and without litigation while also improving employers’ compliance with the FLSA. For employees, it helps to ensure that wages legally due back are received faster. Unfortunately, the DOL ended the program on Jan. 29, 2021.
The Ensuring Workers Get PAID Act of 2021 to reinstate the PAID program would be beneficial to small businesses that don’t have dedicated compliance experts on their staff like larger businesses. The beneficial program would provide a path to fixing unintentional violations before small businesses are required to pay a penalty.
Looking ahead, legislation being considered in Congress could further raise the stakes for small businesses on this issue. For example, proposals in the Build Back Better Act would increase the penalty for minimum wage and overtime violations from $1,100 to $20,740 per violation and the tipped credit violation penalty from $1,100 to $11,620.
“As Congress continues to debate legislation that would substantially increase penalties for minimum wage and overtime violations, this compliance assistance program would help honest small business owners before they are assessed penalties under a strict liability standard,” said Vice President of Federal Government Relations Kevin Kuhlman.