What you need to know:
- DOL will no longer seek liquidated (double) damages in pre-litigation FLSA settlements, limiting recovery to unpaid wages.
- Liquidated damages still apply in court cases, so employers remain at risk in litigation.
Early in the Biden administration, the Wage and Hour Division of the Department of Labor (“WHD”) issued Field Assistance Bulletin No. 2021-2 reversing practices adopted during the first Trump administration and returning to a more vigorous pursuit of liquidated damages from employers in pre-litigation investigations regarding potential violations of the Fair Labor Standards Act (“FLSA”). Now, just a few months into the second Trump administration, the WHD has reversed course again.
Pursuant to Field Assistance Bulletin No. 2025-3, FAB No. 2021-2 is rescinded and the WHD will limit all pre-litigation administrative settlements to the recovery of unpaid wages or overtime compensation. It will no longer request any liquidated damages in pre-litigation investigations or resolutions. Liquidated damages are essentially “double damages,” requiring an employer that is liable for minimum wage or overtime compensation violations pay a second amount equal to the unpaid wages.
In explaining this new approach, the WHD noted that Congress had “authorized” liquidated damages “only in judicial proceedings – not administrative matters” under the FLSA’s Section 216(c), which allows the DOL to “supervise the payment” of unpaid wages or overtime compensation to employees. It is the WHD’s opinion that is it “not authorized to seek liquidated as part of any payment it supervises under § 216(c).” The WHD also pointed to Section 260 of the FLSA to support its conclusion, because that Section vests courts – not the Agency – with the authority to evaluate employer’s good faith defenses that might preclude a recovery of liquidated damages. FAB 2025-3 states that “[t]he structure of § 260 reinforces that liquidated damages are a judicial remedy, and not an administrative tool available.”
The practice of seeking liquidated damages in pre-litigation investigations and settlements began in 2010 under the Obama administration. While the first Trump administration attempted to rein this practice in to an extent with FAB No. 2020-2, the current stance is more aggressive. Of course, liquidated damages remain available in any litigation involving an FLSA violation – whether that litigation is brought by the WHD/DOL or a private party.
