Connecticut Challenges Federal Wage and Hour Reform Program

HR & Safety

Connecticut has joined nine other states challenging a U.S. Department of Labor pilot program that streamlines the resolution of inadvertent overtime and minimum wage violations.
DOL launched the six-month, nationwide Payroll Audit Independent Determination program in March to help settle Fair Labor Standards Act violations by employers that proactively reach out to the agency.
“The PAID program will ensure that more employees receive back wages they are owed—faster,” DOL officials said in March.
“Employees will receive 100 percent of the back wages paid, without having to pay any litigation expenses, attorneys’ fees, or other costs that may be applicable to private actions.”
Employers currently in litigation or under investigation for violations are not eligible to participate in the program, which DOL said was designed to identify and correct potential non-compliant practices.
DOL’s Wage and Hour Division oversees the resolution process, assessing the amount of wages due and supervising payment to employees.

Self-Audit Requirement

In addition to paying the sums owed to employees, employers that participate in the program must agree to review compliance assistance materials and audit their pay practices.
However, state attorneys general from California, Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey New York, Pennsylvania, and Washington have all signed a letter to U.S. labor secretary Alex Acosta complaining about “improper federal overreach.”
The letter claims that as the U.S. DOL does not supervise any claims made under state laws, “there is a significant danger that employers will abuse the PAID program to pressure employees to broadly waive their rights under state labor laws.

CBIA's Eric Gjede

We encourage state government agencies, particularly those faced with budget and resource challenges, to be more accepting of new solutions.

"Please be advised that we will continue to prosecute labor violations to the fullest extent of our authority, both civilly and criminally, regardless of whether employers have participated in the PAID program."
The letter claims the PAID program could mean workers receiving overdue wages would waive their rights and remedies under state law.
In particular, the letter notes that state laws also require employers to pay liquidated damages, interest, and penalties, which the PAID program waives for eligible companies.

'New Solutions' Needed

In Connecticut, for example, such violations require employers to pay double the amount of compensation owed, as well as interest and fees. 
Connecticut's objection to the program follows several unsuccessful attempts this past legislative session by the state labor department to enact a new payroll tax on businesses to fund the personnel it says it needs to maintain services.
CBIA's Eric Gjede says the PAID program allows regulators to drastically reduce the backlog of inadvertent violations, and the same time streamlining regulatory enforcement while retaining worker protections.
"We encourage state government agencies, particularly those faced with budget and resource challenges, to be more accepting of new solutions to old problems," Gjede said.
"This really is a new way of looking at things—working in partnership with businesses to help them with legal and regulatory compliance rather than the old 'gotcha' mentality that too often erodes the business climate."

CBIA's Wage & Hour Self-Audit conference, Sept. 20 in Wallingford, will provide the basics for evaluating whether your wage and hour practices are in compliance and prepare you for addressing violations under the PAID program, should you choose to participate in this federal initiative. For more information, contact CBIA's Mark Soycher (860.244.1900) | @HRHotline


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