Should You Participate in Payroll Audit Independent Determination (PAID)?
The Payroll Audit Independent Determination (PAID) may be a solution for some restaurant owners to deal with wage violations. Even so, it is always wise to get a legal opinion so you can make an informed decision that protects your interests.
How Does PAID Work?
The incentive that PAID offers is that employers can resolve potential overtime and minimum wage violations under the FLSA without resorting to litigation.
A few qualifications to participate in the program are that the employer has not been sued during the previous five years and is also not currently party to a lawsuit brought against them for FLSA violations.
The PAID program encourages employers to do self-audits. If they find overtime or minimum wage violations, they can report the violations themselves and work to correct their mistakes and pay the affected employees the back wages owed.
The self-audits focus on identifying potential violations, the employees affected by them, the timeframe of the violations and the amount of back wages owed.
Once you have conducted the audit, you must submit the information to the Wage and Hour Division (WHD) and go through the compliance steps. The advantage of going through the steps and receiving WHD supervision and certification before paying back wages owed is that employees will have to waive their rights to pursue a private lawsuit.
Challenges Restaurant Owners Face
Paying a single employee back wages may not be the greatest threat that a restaurant owner faces. However, a collective lawsuit and paying many employees, plus penalties and other expenses can be daunting.
Under the Fair Labor Standards Act (FSLA), a single employee can file a lawsuit against the restaurant for a collective action. For the lawsuit to ensue, it is not necessary for the employee to provide proof or gather multiple parties. The employer bears the burden of proof and must show that the restaurant’s employees received fair pay under the FLSA.
Stephen Hans & Associates provides extensive legal guidance to business owners regarding wage and hour and other employment related issues.