DOL Brings Back Payroll Audit Independent Determination (PAID) Program

The U.S. Department of Labor (DOL) announced on July 24, 2025, the return of its Payroll Audit Independent Determination (PAID) program. The program was initially launched in April 2018 to facilitate early resolution of Fair Labor Standards Act (FLSA) compliance issues, but it was discontinued in January 2021 after a change in administration. The new version of the PAID program will include some additional requirements compared to the prior program, and it will be expanded to include opportunities to resolve potential violations of the Family and Medical Leave Act (FMLA).

Briefly, the PAID program works as follows:

• Employers conduct self-audits to identify potential FLSA or FMLA violations.
• Employers then work with the DOL Wage & Hour Division (WHD) to correct those violations and pay back wages (if any) or implement other remedies.
• The program is voluntary and aims to promote compliance without litigation.
• The program may enable employers to quickly resolve compliance issues related to minimum wage, overtime, and FMLA leave.

Eligibility

There are rules and preconditions that apply to any employer seeking to utilize the PAID program to resolve a compliance issue:

• The employer must be a “covered employer” under the FLSA or the FMLA.
• The employer must not be subject to certain federal prevailing wage requirements.
• Within the last three years, the employer must not have been found to have violated FLSA minimum wage or overtime requirements (or the FMLA, if applicable) by a court or the DOL.
• The employer may not currently be under investigation by the DOL, to the best of the employer’s knowledge, nor may the employer be party to any private litigation or state enforcement agency investigation asserting that the violations at issue for the PAID audit violates the applicable FLSA or FMLA requirements.
• The employer must inform the DOL of any recent complaints of which it is aware by employees or their representatives, to the DOL or to state enforcement agencies, challenging the compensation or leave practices at issue in the proposed PAID audit.
• The employer cannot have participated in a PAID audit related to the FLSA or the FMLA, as applicable, within the last three years. It is unclear whether the three-year lookback will be the last three calendar years, or the last three years that the PAID program was active.
• The employer will have a continuing duty during the audit to inform the DOL of any changes in the above information.
• The employer must acknowledge that participation in the PAID program will not cut off employee rights: (1) under other state and local laws as it relates to an FLSA self-audit; or (2) under other federal (e.g., the Americans with Disabilities Act, Title VII), state or local laws as it relates to an FMLA self-audit.

Additional Rules

Employers should be aware of some additional rules surrounding the implementation of the PAID program:

• The program will not apply retroactively. Employers that have already paid back wages to employees outside the scope of the PAID program will not get a release of claims, because the payments will not have been supervised by the DOL.
• When the employer applies to conduct a self-audit, it must self-identify with the DOL. As a result, there is no ability to explore possible participation anonymously before deciding whether to participate.
• Employers must complete a “certification of compliance” with the FLSA or FMLA, as applicable. It is unclear, however, exactly what the employer will be expected to certify.
• There is no guarantee an employer will be accepted by the DOL to perform an approved self-audit under the program. It is unclear what action, if any, the DOL might take with respect to an employer that is not accepted into the program.
• Employees are not obligated to accept back wage payments; they may reject payments and pursue a private claim against the employer. Employers may not retaliate against employees who accept or reject a back wage payment.
• The release of claims will be limited to the FLSA or FMLA violations disclosed during the self-audit.
• The DOL will issue forms describing the settlement terms for each employee (NOTE: this is a new form that was not used in the previous iteration of the PAID program).
• The DOL will not issue the payments; the employer must be prepared to issue payments within 15 days of receiving the summary of back wages from the DOL, and provide proof of payment and documentation of other remedies to the DOL. It is unclear whether the employer will be obligated to pay any unclaimed wages to the DOL.
• Notably, there is no reference to the DOL’s recent stated enforcement policy that it would not pursue liquidated damages in wage and hour investigations. It is unclear how that enforcement policy will impact PAID self-audits.
• For FMLA self-audits, if FMLA remedies other than wages are due, the DOL will review the violation records and proposed remedies and confirm whether the proposed remedies are adequate. These remedies must be implemented within 15 days of receipt of the finalized self-audits results from the DOL.

Final Thoughts

The DOL’s announcement of the revitalization of the PAID program is consistent with the current administration’s previously stated philosophy of seeking to collaborate with employers to efficiently identify and resolve compliance issues, rather than to penalize them for errors. 

The revitalization of the PAID program is a promising development that may enable employers to resolve potential FLSA and FMLA violations upon discovery and avoid costly and time-consuming litigation. There are a number of significant implications that can arise from signing up for a self-audit, however, and it is crucial that employers are well informed of the risks and benefits associated with this type of self-audit. Employers should consult with experienced counsel before initiating a self-audit under the PAID program.