DOL Relaunches PAID Program, Expanding Self-Audits to FMLA

On July 24, 2025, the U.S. Department of Labor (DOL) announced the return of its Payroll Audit Independent Determination (PAID) program. Originally launched as a pilot in 2018 and discontinued in January 2021, the initial PAID program allowed employers to conduct self-audits to identify and resolve overtime and minimum wage violations of the federal Fair Labor Standards Act (FLSA). The revamped PAID program resurrects the discontinued PAID program and increases its scope to include certain Family and Medical Leave Act (FMLA) violations. This Insight explains key changes to PAID, how the program works, and the benefits and risks for employers. We also outline steps employers should consider now to assess and improve compliance.

Key Features of the Relaunched PAID Program

• Expanded Scope (FLSA + FMLA): Covers federal wage/hour and FMLA violations including unpaid overtime, salary-basis errors for exempt employees, miscalculated leave balances, wrong eligibility determinations, and erroneous leave calculations.
• Eligibility Requirements: Private employers covered under the FLSA and/or the FMLA may participate in the program provided that: (1) have not been found by the DOL or any court to have violated the FLSA or FMLA and have not utilized the PAID program, each within the past three years; and (2) are not currently under investigation by the Wage & Hour Division of the DOL (WHD), or involved in any litigation related to the FLSA or FMLA. Employees subject to prevailing wage requirements, such as those under the H-1B, H-2A, H-2B visa programs, the Davis-Bacon Act or the Service Contract Act, are excluded from the program, meaning that issues discovered relative to excluded employees during a self-audit cannot be addressed through the PAID program.
• Compliance Review Training and Certificate of Completion: To participate in the PAID program, employers must complete two compliance assistance reviews – one for the FLSA and the other for the FMLA, both of which are available through the DOL’s PAID portal.  After completing the reviews, the system will generate certificates of completion. Employers must submit copies of both certificates, along with self-audit documentation.   This process ensures that employers possess a foundational understanding of these laws before starting audits.   
• Conducting the Self-Audit:  The audit must specifically identify potential violations, identify affected employees and the time period in which each was affected, and calculate back wages owed and/or specify appropriate FMLA remedies.  Employers must then submit these findings to the WHD, which will review and evaluate the information and calculations provided before discussing next steps. 
• Payment and Settlement Process: After reviewing the back wages due, WHD will issue a summary of unpaid wages to the employer.  At the same time, the WHD will issue settlement forms to impacted employees.  Employers have fifteen days following receipt of the wage summary from WHD to pay employees’ back wages for FLSA violations and to implement appropriate FMLA-related remedies, as applicable.

The WHD will not assess monetary penalties on employers that promptly follow the steps outlined above.  PAID may be particularly valuable for employers who suspect significant wage/hour or FMLA compliance exposure, as it provides a structured, penalty-free path to resolve the violations while demonstrating good faith cooperation with the DOL.

Employer Benefits of Using PAID

• Control Over Scope: Employers may set the scope of the audit and propose corrections to violations discovered.  This allows employers to conduct narrowly focused audits geared towards known issues rather than risking exposure to broad DOL investigations.
• Reduced Enforcement Risk: Self-correcting employers can resolve claims without incurring penalties from the WHD and may achieve quicker and less expensive resolutions without litigation. This approach can also help to reduce the likelihood of a formal WHD investigation or further enforcement action.
• Strategic Value for High-Risk Employers: Employers facing potential significant wage/hour or FMLA compliance exposure can leverage PAID’s structured, penalty-free framework to systematically address violations while demonstrating proactive cooperation with the DOL.
• Compliance Incentives: Participation in the PAID program demonstrates good faith compliance and helps establish a compliance culture.

Employer Considerations and Risks

• Limited Scope of Legal Protection: While the PAID program resolves federal wage and hour violations, employers remain exposed to state and local wage and hour claims, as well as potential claims that may arise from the same underlying circumstances. Employers should conduct a comprehensive legal risk assessment before participating.
• WHD Retains Final Authority Over Calculations:  Although employers conduct their own self-audit and calculate back wages owed, the WHD reserves the right to review, reject, and modify these calculations. Employers must accept the WHD’s final determination of wages and remedies due, potentially resulting in higher costs than initially calculated.
• Employee Participation is Optional: Employees may reject a settlement offer and pursue private litigation.
• Limited Releases: The releases of claims that must be used as part of the PAID program are narrow, covering only the specific violations discovered and disclosed to the WHD.
• Strict Requirements and Deadlines:  As discussed above, the fifteen-day deadline for payment and remedy implementation is strict. And, once the WHD reviews and approves the employer’s self-audit and provides a summary of unpaid wages and remedies due, the employer is obligated to proceed with the resolution. If the employer fails to comply with the WHD’s resolution, the WHD can take further action, including pursuing a lawsuit to compel compliance, and the employer could face additional penalties like civil money penalties and potentially criminal prosecution for willful violations.
• Eligibility Screening: The WHD may reject applications for the PAID program and instead pursue an investigation.
• No Anonymous Applications: Employers must fully identify themselves and their business when applying to the PAID Program, eliminating the possibility of anonymous preliminary discussions. This transparency requirement means employers cannot test the waters without full disclosure, potentially exposing them to scrutiny from the WHD even if their application is ultimately rejected.

What Employers Should Do Now

Here are the key action steps employers should consider taking now:

• Assess current FLSA and FMLA compliance, including overtime calculations, meal and rest break policies, exempt/non-exempt classifications, assessments of leave eligibility, leave calculations, and recordkeeping practices. Consider whether to conduct this assessment under the guidance of counsel, to maintain the attorney-client privilege with respect to any findings.
• If violations are found, assess eligibility for participation in the PAID program, considering factors such as whether violations are ongoing, the scope of affected employees, and whether the employer can complete remediation within the program’s strict timelines.
• If weaknesses are found, consider system improvements, such as updating timekeeping systems, strengthening policies and procedures, enhancing supervisor training, and implementing regular compliance audits.  This can be done even without participating in the PAID program.
• Ongoing Monitoring: 
  • Stay current on future DOL guidance, particularly any updates to PAID program procedures or eligibility requirements. 
  • Consider periodic compliance assessments (e.g., annually or bi-annually) to identify issues before they become widespread problems.
  • Regularly review and update wage-hour practices to prevent future violations, especially when implementing new technology or changing business operations.

For questions regarding the PAID program or self-audits, feel free to reach out to your Womble Bond Dickinson attorney, the authors of this Insight, or another member of our Labor and Employment Practice Team. We will continue to monitor this development and will provide updates as warranted, so make sure you are signed up for the Womble Bond Dickinson newsletter.