DOL Outlines Self-Audit Programs to Comply with FLSA, FMLA and More

The U.S. Department of Labor (DOL) on Thursday, July 24, announced the introduction or reintroduction of several self-audit programs to help employers:

• Voluntarily assess and improve their compliance with federal employment laws;
• Enhance worker protections; and,
• Reduce the likelihood of formal investigation or litigation.

“Self-audits are one of the most effective ways to build a culture of compliance and trust,” said Deputy Secretary of Labor Keith Sonderling in a news release posted on the DOL website. “These programs are designed to give employers, unions and benefit plan officials the tools they need to correct potential violations proactively.”

The DOL announcement mobilized self-audit programs at several federal agencies. Employers can access resources, toolkits and program-specific guidance for these programs through the following link. This article focuses on agencies with the most prominent self-audit programs for total rewards professionals.

The Wage and Hour Division (WHD)

WHD is restarting the Payroll Audit Independent Determination (PAID) program to enable employers to self-identify and resolve minimum wage, overtime and leave violations. The program was initially launched under the first presidential administration of Donald Trump in April 2018 as a way to enable early resolution of Fair Labor Standards Act (FLSA) compliance issues. It was pulled in January 2021 by the presidential administration of Joe Biden.

The new version of PAID includes more requirements than the initial program, and was expanded to include efforts to resolve potential violations of the Family and Medical Leave Act (FMLA).

To utilize PAID to resolve a compliance issue, the employer must:

• Be a covered employer under the FLSA or the FMLA.
• Not be subject to certain federal prevailing wage requirements.
• Not, within the last three years, have violated FLSA minimum wage or overtime requirements (or the FMLA, if applicable) as determined by a court or the DOL.
• Not currently (to the best of the employer’s knowledge) be under investigation by the DOL — nor be party to any private litigation or state enforcement agency investigation — for violations of applicable FLSA or FMLA requirements.
• Inform the DOL of any recent complaints by employees (or their representatives) that challenge the compensation or leave practices at issue in the proposed audit.

The PAID program works as follows:

• Employer self-audit. Employers should: (1) review compliance assistance materials; (2) specifically identify the potential violations, employees affected and timeframes each employee was affected; (3) calculate the amount of back wages owed to each employee, if applicable; and (4) specify any other FMLA remedies that are necessary for compliance.
• Employer reports compliance issue(s) to WHD. Employers should then contact WHD to discuss their findings, back wage calculations, remedies due, supporting evidence and methodology. Employers also must submit a concise statement of the scope of the potential violations for inclusion in a liability release, plus a certification that the employer reviewed and meets all the program’s requirements.
• WHD reviews the reported issue(s). WHD will evaluate the submission and provide guidance on next steps, including any additional information required to review the back wages and other remedies due for the identified compensation and leave practices.
• Resolution levied and payment or other remedies enacted. Employers pay back wages and/or remedies within 15 days of receiving the summary of unpaid wages and provide proof of payment and documentation of other remedies to WHD.

A website post by employment law firm Littler Mendelson P.C. provided commentary on the PAID reintroduction, stating, “[The program] is consistent with the current administration’s previously stated philosophy of seeking to collaborate with employers to efficiently identify and resolve compliance issues, rather than to penalize them for errors. [Its revitalization] is a promising development that may enable employers to resolve potential FLSA and FMLA violations upon discovery, and avoid costly and time-consuming litigation. … [Significant implications] can arise from signing up for a self-audit, however, and it is crucial that employers are well informed of the risks and benefits associated with this type of self-audit. Employers should consult with experienced counsel before initiating [a PAID self-audit].”

Employee Benefits Security Administration (EBSA)

EBSA offers two self-correction programs for fiduciaries and benefits plan administrators:

• The Voluntary Fiduciary Correction Program (VFCP) encourages employers and plan officials to voluntarily correct violations of the Employee Retirement Income Security Act (ERISA); and,
• The Delinquent Filer Voluntary Compliance Program (DFVCP) encourages voluntary compliance with ERISA’s annual reporting requirements and offers incentives to late filers, including paying lower penalties.

Under the VFCP, employers may receive conditional relief from certain taxes when corrections are made. EBSA first adopted the program in 2002 and has updated it several times (the last one occurring in 2025). Steps in the process include:

• Identify any violations and determine if they qualify as VFCP-covered transactions.
• Follow the process for correcting specific violations, such as improper loans or incorrect valuation of plan assets.
• Calculate and restore any losses or profits with interest, if applicable, and distribute any supplemental benefits to participants.
• File an application with EBSA and include documentation calling out the corrective action(s) taken.

Under the DFVCP, eligibility is open to plan administrators with filing obligations under Title I of ERISA who haven’t been notified of a failure to file an annual report. Steps in the process include:

• File a Form 5500 or 5500-SF with EFAST2 for each year relief is requested.
• Use the program’s supplied calculator, and submit the required information and payment.
• File the required notices.

Veterans’ Employment and Training Service (VETS)

VETS launched a new program, SALUTE: Support and Assistance for Leaders in USERRA Training and Employment, to help employers:

• Proactively review their policies and practices under the Uniformed Services Employment and Reemployment Rights Act (USERRA); and,
• Ensure service members’ employment rights are respected, and applicable wages and benefits are secured and honored.

USERRA prohibits discrimination based on military service and guarantees reemployment rights, ensuring service members are not disadvantaged in their civilian careers (in the areas of pay, benefits, career development, promotions and more) due to their military service.

Editor’s Note: Additional Content

For more information and resources related to this article, see the pages below, which offer quick access to all WorldatWork content on these topics:

• Employee Benefits
• Organizational Performance
• Total Rewards