If you are in the legal industry, follow trends in labor and employment law, and/or have been to one of our come to Jesus sessions seminars, then you know that wage and hour litigation is becoming increasingly prevalent, both on an individual basis and on a class/collective action level. In Wisconsin, these cases (assuming some basic prerequisites are met) can be brought under Wisconsin wage and hour laws and/or the federal Fair Labor Standards Act (FLSA).
These case have become prevalent because they happen easily and oftentimes without any ill-intent or wrongdoing on a business’ part whatsoever. For example, if a company hires a third party to install a new timekeeping system and, unbeknownst to the company, the system unlawfully rounds employees’ time such that they are not properly paid for all hours worked, the company is on the hook for that unpaid time. It may not be much if it’s only a couple of employees or it hasn’t been happening for very long, but imagine how easily it adds up if the faulty timekeeping system affects thousands of employees over multiple years.
Some companies have been able to catch an issue before a lawsuit has been filed, either through an internal audit or thanks to the help of *ahem crazy intelligent attorneys. When that happens, a company is faced with two choices: 1) own up to it and compensate the affected employees with what they’ve been shorted (doesn’t necessarily eliminate the threat of a lawsuit, but at least limits monetary exposure); or 2) cross its fingers and hope no one notices.
For those companies that discover an issue and want to get out in front by compensating its employees, the Department of Labor (DOL), the federal agency that enforces the FLSA and haunts your wage and hour compliance dreams, announced a new pilot program earlier this month: the Payroll Audit Independent Determination (PAID) program. Under the program, companies that discover (potential) wage violations can self-report the issue to the DOL’s Wage and Hour Division. The company and the DOL then work together to correct the issue, determine the amounts owed to the company’s employees, and effectuate payment of the amounts owed.
The benefits to the company under the PAID program are: 1) employees sign a release to obtain the amounts owed, eliminating the threat of litigation from those employees; 2) attorneys’ fees are greatly reduced; and 3) affected employees do not have to be paid liquidated damages, only the amount owed (in the event of an FLSA lawsuit, a company can be on the hook for not just what an employee was shorted, but double that amount).
Already facing a lawsuit or being investigated for potential violations? Sorry, the program only applies to those who have discover the issue via internal audit and self-report. Also, repeat offenders need not apply.
The pilot PAID program is in effect for the next six (6) months, after which the DOL will review the results of the program and determine how to proceed.
We recommend that all companies perform a wage and hour audit annually to ensure that its timekeeping systems, exemptions, break policies, etc. are in compliance with Wisconsin state and federal laws, whether that be done internally or with the assistance of counsel (did I mention we do those?). We also recommend that companies that discover issues strongly consider utilizing the PAID program.
If you have questions about the program, conducting an audit, or if you’re not quite sure where to begin, contact us and we’ll answer whatever questions you have (it can be after you’re done “working,” aka watching the NCAA tournament).