US Department of Labor Announces New Self-Audit Wage Program, and Amnesty of Sorts

The PAID program affects only the USDOL’s enforcement side of overtime and minimum-wage issues. It does not affect individual employees’ rights to pursue the same remedies (including monetary penalties) on their own under federal law. Nor does it affect individual employees’ rights to pursue the similar remedies under Washington state law for failing to pay employees minimum wage or overtime or failing to pay wages when they are due. This could leave an unsuspecting employer avoiding some monetary risk with the USDOL, but inadvertently exposing it to greater risk in other arenas.

The answer is not for employers to avoid self-audits of pay practices. Self-audits of all employment and compensation practices are generally a good idea, as they identify areas of potential risk and allow employers to address those before they rise to the level of costly litigation. But here are some tips for employers thinking of embarking on the self-audit path of payroll practices:

• Consider using outside counsel to plan and direct the audit. Just involving a lawyer in the audit process doesn’t automatically hide all of its results behind the protection of the attorney–client privilege and attorney-work-product protection, but those protections might allow for greater candor and a more thorough analysis of potential risks.
• If violations are found, consider how to approach employees to inform them. Having frank, honest discussions with employees about how honest mistakes led to some type of underpayment could go a long way to encouraging those employees from seeking additional compensation in the form of monetary penalties.
• If a good rapport with employees is established, consider approaching the USDOL, and in Washington the Department of Labor and Industries, to negotiate a reduction or waiver of agency-assessed penalties.

Wage issues are thorny. But once they are discovered, they shouldn’t be ignored. Employers who think they might have inadvertently underpaid employees should take deliberate, thoughtful steps to quantify and address those issues. For questions about self-audits and whether participating in the USDOL’s new PAID program makes sense for your business, please contact Brian Keeley.