On January 29, the U.S. Department of Labor announced that it was discontinuing the Payroll Audit Independent Determination (“PAID”) program, effective immediately.  Under the program, which began in 2018, employers could self-report wage and hour violations to the DOL with the promise that the agency would supervise a settlement of the violations without seeking liquidated damages or imposing penalties.

Despite its surface appeal, we always thought the program had questionable value for many employers, including because it only resolved Fair Labor Standards Act claims—and not state law claims.  So even after participating in the PAID program, an employer could still be faced with a state law investigation or class action for unpaid wages, liquidated damages, and penalties in one of the many states with their own wage and hour laws and enforcement mechanisms.  Indeed, the month after the program was announced, a coalition of state Attorneys General threw shade on the program, noting that “it would be an improper federal overreach for the [DOL] to attempt to permit employers, under the auspices of the PAID Program, to require employees to waive state law protections in exchange for the employer’s payment of overdue wages.”

Employers that desire a DOL-supervised settlement of FLSA claims–perhaps to avoid the alternative pain of a class action lawsuit seeking outsized attorneys’ fees–needn’t fret.  PAID program or not, the DOL has been supervising settlements since the 1950s.  Section 16(c) of the Fair Labor Standards Act (29 U.S.C. § 216(c)), added to the statute in the 1949 amendments, provides that “the [DOL] is authorized to supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee … and the agreement of any employee to accept such payment shall upon payment in full constitute a waiver by such employee of any right he may have under [the FLSA] to such unpaid minimum wages or unpaid overtime compensation and an additional equal amount as liquidated damages.”  And the DOL has the authority not to seek liquidated damages or penalties, particularly for good faith violations.  See 29 U.S.C. § 260.

In June 2020, then Wage and Hour Division Administrator Cheryl Stanton issued a Field Assistance Bulletin announcing that the DOL would not assess pre-litigation liquidated damages if any one of the following circumstances exist:

  • there is not clear evidence of bad faith and willfulness;
  • the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;
  • the employer has no previous history of violations;
  • the matter involves individual coverage only;
  • the matter involves complex section 13(a)(1) and 13(b)(1) exemptions; or
  • the matter involves State and local government agencies or other non-profits.

It’s only a matter of time before the Biden DOL withdraws that bulletin.

Proskauer’s Wage and Hour Group is comprised of seasoned litigators who regularly advise the world’s leading companies to help them avoid, minimize, and manage exposure to wage and hour-related risk.  Subscribe to our wage and hour blog to stay current on the latest developments, and check out the latest Biden administration developments impacting employers on Proskauer’s Law and the Workplace blog.

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Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York TimesReutersBloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.