Seyfarth Synopsis: The U.S. Department of Labor has officially revived its Payroll Audit Independent Determination (PAID) program. Designed to help employers proactively resolve FLSA issues—and now, for the first time, certain FMLA violations—the renewed program offers potential benefits but comes with conditions and risks that require careful navigation.
On July 24, 2025, the DOL’s Wage and Hour Division (WHD) announced the re-launch of the PAID program. Originally rolled out in 2018 under the first Trump Administration (and discontinued by the Biden DOL a few years later), PAID aims to encourage employers to self-identify and correct compliance issues under the FLSA and FMLA.
This move is part of a broader WHD shift toward cooperative enforcement. PAID is merely the latest step in a series that has also included, for example, the return of opinion letters and a pullback on liquidated damages in administrative cases.
The DOL’s message seems clear: Proactive compliance efforts are encouraged and will be rewarded.
But as always, the details matter.
How the PAID Program Works
PAID is a voluntary program through which employers conduct a self-audit, disclose findings to WHD, and—if accepted into the program—resolve potential violations. The steps generally include:
At its core, PAID is a voluntary program designed to help employers resolve potential minimum wage and overtime violations under the FLSA, as well as certain potential violations under the FMLA. At a high level, the process envisioned by WHD works as follows:
- Self-audit. The employer reviews compliance assistance materials; identifies the potential violations and impacted employees; calculates back wages owed, if applicable; and specifies any other FMLA remedies that are necessary for compliance.
- Report to WHD. The employer contacts WHD to discuss their findings. They must also submit a concise statement of the scope of the potential violations for inclusion in a release of claims, and certification that the employer meets all the program’s requirements (more on that below).
- WHD Review. WHD evaluates the submission and provides guidance on next steps, including any additional information required to review the back wages and other remedies due for the identified compensation and leave practices.
- Resolution. The employer pays back wages or remedies within 15 days of receiving a summary of unpaid wages and provides proof of payment and documentation of other remedies to WHD.
For employers, the program provides a potential avenue to correct mistakes without inviting the threat of fines, litigation, or plaintiffs’ attorney fees (though, as noted below) not all exposure necessarily disappears). For employees, of course, the program offers a path to receive back wages or other remedies promptly and without the burden of litigation.
Who Can Participate?
Participation is not for all employers, and even for qualified employers it is not automatic. Employers who wish to participate in the program must certify, among other things, that:
- No prior violations or pending litigation. Neither WHD nor a court of law has found within the last three years that the employer has violated the FLSA, nor is the employer party to any litigation asserting such violations.
- No current investigation. To the best of the employer’s knowledge, WHD is not currently investigating the practices at issue.
- No undisclosed complaints. The employer has informed WHD of any recent complaints by its employees or their representatives concerning the practices at issue.
- No recent involvement in PAID. The employer has not participated in PAID within the last three years to resolve potential FLSA minimum wage or overtime violations.
- No impact on state/local laws. The employer must acknowledge that participating in the program does not cut off employee rights under other state or local laws.
Importantly, even employers that meet the program’s conditions must apply and receive WHD approval before initiating a self-audit under PAID. As WHD notes on its PAID website, “potential participants are examined on a case-by-case basis.”
What Else is in the Fine Print?
The revived PAID program includes several enhancements and limitations that employers should keep in mind:
- Expanded scope. Employers may now self-audit certain FMLA violations, though procedures for non-wage remedies (e.g., leave restoration) remain under development.
- The DOL will require employers to disclose their names upfront. As part of the early certification process, employers will need to disclose their name (including the name of the person reaching out, and the name of their company).
- The process will include form settlement documents. The DOL will issue settlement forms for each employee and require employers to confirm payment within 15 days.
- Releases are limited in nature. While employees who accept payments will release their claims, WHD explains on its website that “releases are limited to the identified violations articulated in the PAID Acceptance Letter and the time period for which the employer is paying the back wages or providing other remedies.” WHD notes, further, that it “may not supervise payments or provide releases for state law violations.”
Practical Considerations for Employers
The return of PAID presents a welcome change for employers, but employers considering participating must also appreciate the program’s nuance and proceed thoughtfully.
The plus side is obvious. PAID offers a structured way to correct technical or inadvertent compliance mistakes, potentially reducing exposure, making employees whole easier and faster, and reinforcing a culture of compliance. Coupled with opinion letters, DOL and WHD are offering avenues to ostensibly ease compliance woes both prospectively and retrospectively.
That said, participation should be approached with appreciation for potential benefits and risks alike. For example, as noted above, PAID releases will be limited in scope; in some states, an employee who receives a payment and releases their claims could conceivably turn around and file a state law claim concerning the same core facts. Also, because participation in PAID isn’t guaranteed even for employers that meet eligibility requirements, some may worry that if WHD declines participation, they will have brought attention to practices they hoped to quietly correct.
What Employers Should Do Now
The re-launched PAID program underscores WHD’s more-carrot / less-stick compliance mindset. For many employers, the program could be a useful tool, no different than the resurrected opinion letter program.
But these programs are rich with nuance and hardly a free pass. Whether PAID makes sense for a particular employer will turn on the nature of the potential violation, the state/local jurisdictions involved, the employer’s risk tolerance, and many more factors.
Employers considering participating should work with trusted legal counsel to evaluate eligibility, structure a compliant self-audit, and navigate communications with the DOL. Thoughtful planning on the front end can help to ensure that PAID serves as the effective, proactive compliance tool it is intended to be, while avoiding potentially costly missteps.
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