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NY AG sues US DOL to compel production of records on PAID Program

By Pamela Wolf, J.D.

New York Attorney General Barbara D. Underwood has filed a lawsuit against the U.S. Department of Labor for neglecting to respond to records requests about its Payroll Audit Independent Determination (PAID) Program, which she said permits employers who violate labor laws to avoid prosecution and penalties. The complaint seeks to compel the DOL to respond to Underwood’s request for information sent to the federal agency in April 2018.

PAID Program. Under the PAID program, employers are urged to conduct audits and, if they discover overtime or minimum wage violations, to “self-report” those violations. Employers are expected to work in good faith with the DOL’s Wage and Hour Division to correct their mistakes and to quickly provide 100 percent of the back wages due to their affected employees. The PAID program would relieve employers of the added burden of liquidated damages and penalties that they may currently be required to pay.

No response to FOIA records request. The New York AG submitted a Freedom of Information Act (FOIA) request to get information relating to her concern that the PAID program would erode workers’ rights by allowing employers to evade prosecution and penalties for wage theft under state labor laws that are more protective than federal law. The request also sought agency records on the development, implementation, consideration, and evaluation of the PAID program, including communications with employers. To date, the DOL has failed to provide any agency records in response to the FOIA request, according to Underwood.

The complaint alleges that the DOL has failed to provide required information in response to the AG’s request within the statutorily prescribed time limit. Under the FOIA, a federal agency must respond within 20 business days after receipt of a request with a determination that must at least inform the requester of the scope of the documents that the agency will produce. But the DOL has purportedly failed to provide any such determination, more than 100 days since the date of the request.

No penalties, liquidated damages, interest on overdue wages. In an April 2018 letter to Labor Secretary Alexander Acosta that was signed by 10 other state attorneys general, the New York Attorney General’s office voiced concerns about the PAID program when it was first launched that month. The letter raised several concerns about the PAID program, including that it releases employers from the obligation to pay penalties, liquidated damages, and interest on overdue wages.

State law wages due are unaddressed. The PAID program also appears not to require employers to pay employees at any applicable higher state or local minimum wage or overtime wage rates, or to pay wages owed during longer state statute of limitations periods, the New York AG noted. For a New York City fast food worker, for example, that could mean the difference between recovering wages at the federal minimum wage of $7.25 an hour, rather than the applicable state minimum of $13.50. Further, the PAID program encourages employers to have employees sign separate releases to settle claims under state law, yet the DOL refuses to oversee such state-law settlements to ensure that they are fair.

“The PAID Program is nothing more than a get-out-of-jail-free card for predatory employers,” Attorney General Underwood said in a release. “New York workers have a right to know why the Secretary of Labor decided to let employers off the hook when they don’t pay their workers. The Labor Department failed to provide required information—so we’re taking them to court to get the information to which we are legally entitled.”

The lawsuit, New York v. U.S. Department of Labor, was filed in the Southern District of New York; the case is No. 1:18-cv-07029.