Department of Labor relaunches self-audit program to aid employer compliance

The U.S. Department of Labor (DOL) has reintroduced its Payroll Audit Independent Determination (PAID) program, offering employers a voluntary path to self-identify and correct potential violations of the Fair Labor Standards Act (FLSA) and Family and Medical Leave Act (FMLA) before formal investigations begin.

The new iteration of the program builds on the 2018 pilot but expands the scope and introduces additional requirements as follows:

• Self-audit and proactive fixes
  Employers may conduct internal reviews of wage, overtime and leave practices and work with DOL’s Wage and Hour Division to resolve any issues through payment of back wages or other remedial steps, without facing litigation.
• Voluntary participation with transparency
  Eligible employers must self-identify to the DOL, report any known employee complaints, and certify that they are not currently under DOL or state investigation on the relevant issues.
• Covers FLSA and FMLA
  In contrast to earlier versions, the program now includes FMLA compliance issues alongside wage‑hour corrections.

‘Culture of compliance and trust’

The DOL emphasizes that self-audits help build a “culture of compliance and trust” while reducing enforcement risk for companies willing to address problems proactively.

That aligns with broader agency efforts to encourage voluntary correction programs across multiple business areas.

HR, payroll, and legal teams should weigh the following:

• Eligibility assessment: Employers must confirm they have not had recent violations or be under existing formal investigations to participate.
• Full disclosure: Participation requires full transparency about known internal complaints related to pay or leave claims.
• Program trade-offs: Employers gain relief from penalties but accept that identified violations become known to the DOL. Employee rights under federal, state or local laws remain intact outside the audit.

Compliance strategy

The PAID program offers a compelling compliance strategy for businesses seeking to resolve potential FLSA or FMLA violations on friendly terms.

Employers should:

• Review internal processes to identify gaps.

• Decide whether proactive self-audit and resolution could mitigate risk.
• Consult legal counsel to evaluate the program’s applicability and implications and to ensure it aligns with broader compliance goals.

By engaging with PAID, organizations can demonstrate good-faith efforts to comply with wage and leave laws before whistleblowers or audits raise the stakes.