August 22, 2018

Warren, Colleagues Question Labor Secretary Acosta on Program Removing Wage Theft Penalties

Senators Concerned PAID Program Undermines Federal Wage-and-Hour Laws, Harms Workers

Text of Letter (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.), along with Senators Sherrod Brown (D-Ohio), Kirsten Gillibrand (D-N.Y.), Chris Van Hollen (D-Md.) and Tammy Baldwin (D-Wisc.), today sent a letter to Alex Acosta, Secretary of the U.S. Department of Labor (DOL), to express their concern about a six-month pilot program by the DOL's Wage and Hour Division (WHD) that would eliminate the deterrent effect of federal sanctions for wage theft and seriously harm workers being cheated by their employers.  The senators' letter requested additional information on the implementation and effectiveness of the Payroll Audit Independent Determination (PAID) program, which is expected to conclude in September.  

The DOL's Wage and Hour Division has the mandate to protect workers from wage-and-hour violations by requiring employers that committed wage theft to return to employees the wages that were stolen, along with interest on that money and "liquidated," or double, damages. For repeated and willful violations, WHD may additionally assess civil monetary penalties. 

In March, the DOL launched the PAID program, a new six-month pilot program that will grant employers that steal their employees' wages immunity from fines and lawsuits if they self-report minimum wage and overtime violations.  For employers who choose to participate and report their own violations of wage-and-hour laws under the program, the WHD would require only that employers pay back wages to the affected employees and allow them to avoid further penalties created by federal law to ensure that employers do not steal from their workers again.  While there are some minor limits on program eligibility, there appear to be few other limits on participation, meaning that for many employers, wage-and-hour laws' deterrent effects could be eliminated. 

In their letter to Secretary Acosta, the senators raised concern that the PAID program would ultimately undermine the DOL's ability to penalize offenders and effectively deter future violations. "The door therefore appears to be wide open for abuse, allowing employers to avoid paying interest or liquidated damages for wage theft and eliminating any deterrent effect that wage-and-hour laws have for employers that steal from workers, no matter the scale of the employers' theft," the senators wrote. "Illegally delaying or withholding wages from workers is wrong and unfair; for many low-wage workers living paycheck-to-paycheck, it can be devastating."

The senators' letter also criticized the PAID program for its potential to interfere with state-level wage-and-hour enforcement, pointing out that employers participating in the program could mislead employees to forgo their rights to seek further relief under local and state law.  These concerns echo those raised by eleven state Attorneys General in a letter sent to Secretary Acosta in April. 

"While the Department has described this program as providing an opportunity for employers to correct non-compliant practices and return back pay to workers, the penalties that this program eliminates exist to ensure employers pay their workers correctly in the first place," the senators continued. "Letting violators off the hook for wage theft penalties tilts the economic playing field even further against workers and in favor of unethical corporations that break the law."

The senators urged Secretary Acosta to stop the PAID program at the conclusion of its six-month pilot period and perform a thorough assessment of its effects on workers.  To better understand the impact of the program, the senators asked Secretary Acosta a series of questions about its goals, implementation, and effectiveness.