State AGs oppose new federal initiative
Independent Determination, or PAID, program, employers who uncover an inadvertent violation can self-report it to the Department of Labor and — provided they quickly pay the back wages they owe — avoid the double penalty.
Firms cannot take advantage of the program if they are already under investigation for the practices in question or if they are repeat offenders, according to the DOL.
“What [an employer is] supposed to do is get [its] ducks in a row and go to the department,” Mr. Ho said. “Self audits come up in different ways,” including internal investigations and employee complaints, he said. “Most responsible companies would look into it and get their arms around, ‘How big a problem is this?’”
Once an employer has submitted information to the Department of Labor, the department examines the employer’s conclusions and makes a final determination regarding which employees deserve back wages. The Department of Labor can also turn down employers who do not meet the program’s standards.
At the end, each employee must sign a waiver of his or her right to sue under the FLSA before receiving back wages.
Even after the DOL has given its stamp of approval, employers may not be off the hook.
“The risk is that there will be some employees who will take it to their attorney,” said Martin Saunders, a labor lawyer with the law firm Steptoe & Johnson in Canonsburg.
Individual employees have the right to turn down the money offered through the PAID program and instead pursue their claims in court. The risk, according to Mr. Saunders, is that once employees find out about the presence of a wage violation, they will use that knowledge to pursue not only back wages but also damages.
Further problems for employers arise under state law, which is not covered by the federal program.
In an April 11 letter to U.S. Secretary of Labor Alexander Acosta, the attorneys general of 10 states and the District of Columbia, including Pennsylvania’s Josh Shapiro, expressed strong opposition to the program.
“The PAID program appears to be an amnesty program,” they wrote. “We will continue to prosecute labor violations to the fullest extent of our authority, both civilly and criminally, regardless of whether employers have participated in the PAID program.”
The Pennsylvania attorney general’s office referred inquiries to the Pennsylvania Department of Labor and Industry, which did not provide additional comments on the state’s position.
Based on the risk of employee lawsuits and state investigations, employers seem to be approaching the new program with caution.
“A lot of people are trying to get their arms around the downside,” Mr. Ho said. “I don’t think there’s any kind of consensus of management lawyers thinking this is a good idea. ... I’ve heard of only two people who have gone through with this.”
“I’ve never had an employer come to me and want to participate,” Mr. Saunders said.
The U.S. Department of Labor has not released data on participation in the program so far, and spokesman Edwin Nieves said that information would not be available until the trial period ends in October.