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DOL Will No Longer Seek Liquidated Damages As A Default Policy In Wage And Hour Cases

The Department of  Labor has pulled back from its policy of seeking liquidated damages – or “double” damages – against employers in wage and hour investigations.  On June 24, 2020, the DOL issued a field assistance bulletin which stated that it will no longer apply the default policy of seeking pre-litigation liquidated damages from employers who are found to owe back wages to workers.  Specifically, the Department will not assess liquidated damages if any one of the following circumstances exist:

  • there is not clear evidence of bad faith and willfulness on the part of the employer;
  • the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;
  • the employer has no previous history of violations;
  • the matter involves individual coverage only;
  • the matter involves complex section 13(a)(1) and 13(b)(1) exemptions; or
  • the matter involves State and local government agencies or other non-profits.

The Department is additionally requiring that each request for pre-litigation liquidated damages must be submitted to and approved by both the Wage and Hour Division Administrator and the Solicitor of Labor on an individual basis.

This new policy marks a significant change from the DOL’s prior policy of routinely seeking liquidated damages in wage and hour cases.  As justification for this change, the DOL cited the need to reduce the regulatory burden on businesses dealing with the various challenges posed by the COVID-19 pandemic.  The DOL also referenced its goal of ensuring that “employers who genuinely work to understand their obligations under the FLSA and are generally in compliance, and who elect cooperatively to resolve alleged violations without litigation and, therefore, return unpaid wages to workers expeditiously, are not also saddled with doubled damages designed for the litigation context that might jeopardize the ongoing existence of these employers and, as a result, the jobs of American workers.”

While the Department will continue to pursue liquidated damages in appropriate cases, this will be the exception, rather than the rule, for wage and hour investigations.

For help navigating wage and hour investigations, please call us today at (410) 727-4300.

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