DOL no longer will collect liquidated damages from employers in federal pay law violation investigations
The Department of Labor’s Wage and Hour Division no longer will seek or collect “liquidated damages” as part of its administrative settlement investigations of employers deemed to have violated the Fair Labor Standards Act, the agency announced Friday in a bulletin to regional administrators and district directors.
“Congress made clear that such damages are reserved for judicial proceedings and responsibility falls to the courts of law – not the Department of Labor,” the agency said in a Friday press release. The division will focus on recovering unpaid minimum wages or overtime compensation from employers.
The amount of liquidated damages assessed to an employer typically has equaled the amount of unpaid minimum wages or overtime pay that were incorrectly withheld from employees, “effectively doubling the cost to employers for not following the law,” Politico reported.
Attorneys at Littler Mendelson called the announcement “welcome news for employers seeking to correct past payroll errors by voluntarily paying minimum wages and overtime compensation found to be owed as part of a WHD investigation as it removes the deterrence that such payments must also include an equal amount as liquidated damages.”
According to the Labor Department, the division did not seek liquidated damages in the administrative investigation stage before 2010. Under the Obama administration, however, the agency began seeking liquidated damages before a case was referred for litigation.
The practice was suspended in 2020 during the first Trump administration and was reversed again in 2021 under President Biden. Politico said that the new practice, which went into effect Friday, “goes beyond the rollback initiated in the first Trump administration.”
The Labor Department said that guidance about liquidated damages under the Biden administration was “vague,” and gave the agency “virtually unfettered discretion.”
“Ending this practice will foster more effective dispute resolution and ensure more fair, timely outcomes for American workers and businesses,” the DOL said.
