The PAID Program Is Back

If you haven’t yet heard, the U.S. Department of Labor’s (DOL) Payroll Audit Independent Determination program (PAID) is officially back, with some changes and updates. For HR professionals, especially those working on compensation, compliance, and employee trust, this is a development worth paying attention to.  

Let’s discuss this topic in more detail. Here are three key takeaways you’ll learn in this article: 

1. Learn what the PAID program is 
2. What has changed with the PAID program and why it matters 
3. What HR can start doing in relation to PAID 

What Is the PAID Program? 

The PAID program is a voluntary compliance initiative from the DOL, Wage and Hour Division (WHD). Here is some background on the program as far as its initial launch, discontinuation, and subsequent relaunch.   

• Initial launch: PAID was first introduced in April 2018. It was meant to give employers a structured way to self-audit, disclose, and fix certain wage and hour violations under the Fair Labor Standards Act (FLSA) without going through lengthy investigations or litigation.   
• Discontinuation: The program was discontinued in January 2021. Critics raised concerns that it could limit employee rights to sue, among other legal/policy issues. (Reference shrm.org) 
• Relaunch: On July 24, 2025, DOL announced that PAID is back. The program has been expanded in terms of types of violations covered. It’s no longer just FLSA, but in certain cases, FMLA, and with adjusted requirements and timelines.   

How Does the PAID Program Work 

How can employers get started with this program? Here’s a step-by-step look at how an employer can engage with PAID:   

1. Review Compliance Materials: Before doing anything else, an employer must go through the WHD’s compliance assistance materials related to FLSA and/or FMLA. This is not optional and helps ensure you understand what obligations apply.   
2. Conduct a Self-Audit: Look for potential violations in minimum wage, overtime, tip retention (if applicable), and certain leave or other FMLA related issues. Identify which employees are affected, the time period involved, and how much back pay (or other resolutions) may be owed.   
3. Report to WHD: After your self audit, submit your findings and calculations, plus a concise statement of scope, methodology, supporting evidence, etc, to WHD. You also must certify that you’ve reviewed the materials and comply with the program rules.   
4. WHD Review: The DOL reviews your submission. They may request additional information to verify calculations.   
5. Resolve & Remediate: If accepted, you’ll pay back wages (and any other required components of back pay) within 15 days of receiving the WHD’s summary of unpaid wages or remedies. Provide proof of payment and documentation of other corrective actions. Employees may be asked to sign settlement forms or releases limited to the specific violations that were discovered.   

Who Can Participate? 

Participation is voluntary for employers, but there are conditions. You must: 

• Be covered by the FLSA or FMLA. For FLSA, that means things like having two or more employees, meeting dollar volume thresholds, or geographic coverage. 
• Commit to future compliance under those laws.   
• Not have used PAID in the last three years for the same type of violation (FLSA minimum wage or overtime, or FMLA leave) for the practices you're auditing.   
• Not be currently under litigation or investigation for those same issues. 

There are also limitations around some categories of workers or contracts. For example, the program may not cover violations involving H1B, H2A, H2B visa workers or those covered under prevailing wage laws or the Davis-Bacon Act.  

What’s Different Now? 

Here are some of the key updates of the new revamped PAID program:   

• Expanded scope to include certain FMLA violations. Originally PAID focused only on FLSA wage/overtime/tip etc.  
• Stricter timelines. Once WHD issues its summary of unpaid wages/remedies, payment must be made to employees within 15 days.   
• More certainty around release of liability, but also stricter eligibility and certification requirements. Employers have to be more transparent about prior violations, ongoing complaints, etc.   
• No liquidated damages in prelitigation situations for violations disclosed via PAID. This is a potential benefit to participating employers.   

Why the PAID Program Matters to HR 

For HR teams, this isn’t just legal compliance. It’s strategy, risk management, culture, and cost control. Here are some of the main reasons PAID matters:

1. Reduced Legal Exposure

One of the biggest risks for organizations is FLSA or FMLA noncompliance, such as miscalculations of overtime, misclassification of employees, failure to provide leave, etc. The PAID program offers a structured way to self-report, remediate, and avoid more severe enforcement actions or civil litigation, especially because participating employers may avoid civil monetary penalties and liquidated damages (where applicable) if they meet PAID requirements.  

2. Lower Costs

Legal fees, penalties, class, or collective actions can be very expensive, not just in money, but in management attention, time, and reputation. By using PAID proactively, employers can potentially reduce or avoid litigation costs. Also, quicker resolution means fewer ongoing liabilities.

3. Improved Employee Relations & Trust

When employees see that their organization is proactive, identifying potential issues honestly, taking responsibility, and making corrections, it builds trust. Paying back wages fairly, correcting evaluations or overtime mistakes, and ensuring leave rights are respected all improve morale, reduce turnover, and protect reputation.

4. Alignment with Compensation Strategy & Benchmarks

Programs like OutSolve's Kickstarter Compensation Package are designed to help companies build equitable and market-driven pay structures while also staying compliant. The benchmarking, transparency, and internal pay equity analyses that are part of your compensation strategy make it much easier to spot where your pay practices may fall short under PAID’s audit criteria.   

Having a strong compensation framework already in place, with external and internal benchmarking and transparent pay philosophy, not only helps attract and retain talent, but also means less surprise when doing a PAID self-audit 

What HR Can Do Today 

If you're reading this as an HR leader, manager, or partner, here are concrete steps to take now that PAID is back. 

1. Audit Your Pay & Leave Practices Internally 
   • Make use of your compensation benchmarking tools (with help from OutSolve or elsewhere) to see where market data shows pay is falling behind. 
   • Review payroll data, timekeeping, overtime eligibility, classifications (exempt vs nonexempt), tip policies. 
   • Examine leave policies and whether FMLA leave is being appropriately tracked, approved, and paid. 
2. Evaluate Whether Participating in PAID Makes Sense 
   • Based on your audit, determine if there are violations or potential exposures, how big they are, how many employees are affected, and over what period. 
   • Weigh the cost of correcting now (including back wages, administrative work, communication) vs risk of nonparticipation, including penalties, litigation, and reputational harm. 
   • Consider whether your organization meets the eligibility criteria for PAID, and whether you’d be able to satisfy the timeline requirements (e.g., paying back wages within 15 days, submitting documentation). 
3. Document Improvements & Fixes 
   • Once you identify any gaps, plan for corrective actions. Not just backpay, but operational changes, such as better timekeeping, clear job descriptions, updated policies, manager training, and better tracking of leave. 
   • Maintain good records for payroll, time sheets, internal audits, and communications. These will be essential if you decide to go through PAID, or in defense if anything arises regardless. 
4. Consider State & Local Obligations 
   • PAID addresses federal law (FLSA, some FMLA situations) but many states/localities have wage & hour, overtime, classification, and leave laws that are as strict or stricter. Participating in the federal PAID program doesn’t shield you from state exposure. 
   • Check local laws around pay transparency, paid leave, and rest/meal periods, which may have different thresholds or obligations. 
5. Utilize Compensation Benchmarking Support 
   • If you haven’t already done external benchmarking, or it has been a while since your last external benchmarking, consider doing this. OutSolve's Kickstarter package can help you with external and internal benchmarking, pay equity analyses, and FLSA reviews. These tools help you see where your pay practices stack up against the market, which helps with both compliance and fairness.  
   • Use the insights from benchmarking to make necessary adjustments proactively, rather than waiting for an audit or complaint. 

What the PAID Program Means for Your Organization 

The return of the PAID Program marks an important shift, with more emphasis on self-audits, proactive compliance, and speedy resolution of wage and leave issues. For HR, this isn’t just another regulatory checkbox, it’s an opportunity to strengthen compensation strategy, reduce risk, build trust, and potentially save cost. 

If your organization wants help with compensation benchmarking, fair pay strategy, or getting ahead of potential exposures, then OutSolve's Kickstarter Compensation Package may be a great fit. With benchmarking, internal pay equity analysis, and FLSA review, the package can help you be ready should you decide to use PAID. Contact us today to get started!