The U.S. Department of Labor’s Wage and Hour Division (WHD) offers the Payroll Audit Independent Determination (PAID) program as a voluntary pathway for employers to self-identify and resolve certain wage-and-hour and leave issues under federal law. Under PAID, employers can work with WHD to correct potential minimum wage, overtime, and tip-retention issues under the Fair Labor Standards Act (FLSA), and certain leave-related issues under the Family and Medical Leave Act (FMLA), while ensuring affected employees receive 100% of back wages or other remedies promptly—often without litigation.
DOL relaunched PAID in July 2025 as part of a broader set of “self-audit” initiatives intended to encourage good-faith compliance with the laws the Department enforces.
What is the PAID program?
PAID is a WHD-supervised process that encourages employers to conduct a careful internal review of pay and/or leave practices, self-report potential violations, and then work in good faith with WHD to determine what is owed and to make employees whole. WHD’s program materials emphasize prompt remediation and future compliance.
PAID is not designed for disputes that are already in litigation or under active government investigation. Instead, it is aimed at proactive resolution of potential issues identified through a self-audit.
What types of issues can PAID address?
WHD describes PAID as a mechanism to resolve the following types of potential violations:
- FLSA minimum wage violations;
- FLSA overtime violations;
- FLSA tip-retention violations; and
- Certain potential FMLA violations related to leave practices and appropriate remedies.
Who can participate?
To participate, an employer must be covered by the FLSA and/or the FMLA, must be interested in proactively resolving potential claims, and must be willing to commit to future compliance.
Key participation requirements (eligibility certifications)
When an employer contacts WHD about participating in PAID, WHD expects the employer to be prepared to make certain certifications about eligibility and the status of any related disputes. WHD also retains discretion to accept or decline participation on a case-by-case basis.
How PAID works (high-level process)
WHD summarizes PAID as a four-part process: a self-audit, reporting to WHD, WHD review, and resolution through payment of back wages and/or other remedies.
1. Employer self-audit: Review WHD compliance assistance materials, identify the potential violations, determine the affected employees and timeframes, calculate back wages (if applicable), and specify any other needed FMLA remedies.
2. Report to WHD: Contact WHD to discuss findings, calculations, supporting evidence, and methodology; provide a concise scope statement for inclusion in a release; and certify that program requirements are met.
3. WHD review: Provide any additional information WHD requests so the agency can review back wages and/or remedies due for the identified practices.
4. Resolution and payment or other remedies: After WHD issues a summary of unpaid wages and/or finalized self-audit results, the employer provides payment and implements required remedies and submits proof/documentation to WHD.
Compliance assistance review and certificate
Before conducting the audit, WHD directs employers to review PAID-related compliance assistance materials and complete a certification checklist. After the review, the system generates a certificate of completion that the employer must save or print for submission to WHD.
Self-audit scope and documentation
WHD instructs employers to specifically identify potential violations that may have occurred in the last two years, identify affected employees and timeframes within that period, and calculate back wages and/or specify needed FMLA remedies.
What employers should know: choice, protections, and releases
After WHD reviews the submission, WHD issues a summary of unpaid wages (and/or finalized self-audit results). WHD also issues settlement forms describing the terms for each employee. Employees may freely choose to accept or decline payment, and employers may not retaliate based on an employee’s decision.
Any release of claims is limited to the potential violations and time periods covered by the PAID process and reflects the previously provided release language reviewed by WHD.
Employers are responsible for issuing prompt payment; WHD does not distribute back wages. WHD requires employers to pay all back wages due within 15 days of receiving the summary of unpaid wages, and to implement any required FMLA remedies within 15 days of receiving finalized self-audit results.
Importantly, WHD cautions that if an employer pays back wages before WHD reviews and supervises the settlement, employees will not have waived their rights to pursue a private lawsuit for those potential violations under the FLSA and/or the FMLA.
WHD also notes that it will review employer records to verify information and calculations. If WHD discovers additional minimum wage, overtime, or leave issues outside the employer’s proposed scope, WHD will ordinarily attempt to resolve them as part of the audit.
Benefits of PAID
For employers
For employers, PAID offers a structured, WHD-supervised process to resolve certain potential violations expeditiously and avoid litigation. Although WHD requires payment of all back wages due (or provision of other remedies), WHD states it will not require additional civil monetary penalties when employers choose to participate and proactively work with WHD to fix the practices at issue.
For employees
WHD describes PAID as a “win” for employees because it can help workers receive 100% of back wages (or other appropriate FMLA remedies) as quickly as possible, without the expense of litigation, while preserving each employee’s choice to accept or decline the settlement.
For taxpayers and the broader enforcement system
WHD also highlights that streamlining resolutions through PAID can allow the agency to focus more resources on “bad actors” who intentionally violate the law.
Practical takeaways and how to get started
- Organizations considering PAID generally take the following steps:
- Review WHD’s PAID program materials and complete the compliance assistance review and certification checklist (saving the certificate of completion).
- Conduct a self-audit, identify affected employees and timeframes, and calculate back wages and/or determine appropriate FMLA remedies.
- Correct the practices going forward and assemble supporting records and methodology.
- Contact the relevant WHD district office to discuss next steps and submit required documentation.
- WHD notes that employers with coverage or compliance questions can contact the agency confidentially at 1-866-4USWAGE.
