No More Double the Trouble: DOL Relents on “Automatic” Liquidated Damages

Jason E. Reisman

After enduring a decade or so of the U.S. Department of Labor (“DOL”) “automatically” demanding double the amount of back pay in virtually every settlement of a wage and hour investigation under the Fair Labor Standards Act (“FLSA”), employers around the country can now breathe a heavy sigh of relief. In a Field Assistance Bulletin (“FAB”) dated June 24, 2020, the DOL said it “will no longer pursue pre-litigation liquidated damages as its default policy from employers in addition to any back wages found due in its administratively resolved investigations.”

First, it is somewhat amazing that the DOL admitted that liquidated damages was its “default policy.” While the FLSA clearly allows the recovery of liquidated damages in an amount equal to 100 percent of the back wages due, nowhere does the statute authorize the DOL to impose such damages in an investigation. Though arguably beyond the DOL’s authority in pre-litigation proceedings—that good old ultra vires concept—the lack of explicit statutory authority did not stop the agency from imposing liquidated damages in nearly every case without regard to whether any evidence of bad faith or willfulness existed. Not only did the DOL impose them as a penalty, but it also leveraged the threat of litigation to “persuade” employers to settle and accept the imposition of liquidated damages—remember, it almost never makes sense to fight the government in litigation, as it can outspend just about anyone, while doing so using “your” tax money.

Now, according to the FAB, effective July 1, 2020, the DOL will not assess these double damages if, for example, there is no evidence of bad faith or willfulness or the employer has no previous history of violations or the matter involves complex “white collar” exemption issues. Importantly, seeking pre-litigation damages will require approval from two top DOL officials: the Wage & Hour Division Administrator and the Solicitor of Labor. More hurdles for the DOL—a plus for employers doing their best to comply with a complex, nuanced, and at times tedious statute and regulations.

But, alas, this “practice” change may be short-lived if a new administration takes the White House in 2021. Stay tuned and enjoy it while it lasts!

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