Key Takeaways:
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Employers may benefit from two significant changes made by the U.S. Department of Labor Wage and Hour Division (WHD)
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WHD will no longer seek or collect liquidated damages in administrative actions
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In a relaunch of the Payroll Audit Independent Determination (PAID) program, WHD encourages employers to conduct and follow up on self-audits
On June 27, 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) issued Field Assistance Bulletin (FAB) No. 2025-3 which formally prohibits WHD from seeking or collecting liquidated (double) damages in any administrative (pre-litigation) action under the Fair Labor Standards Act (FLSA). Instead, WHD’s authority is now strictly limited to supervising the payment of owed minimum wages and overtime compensation.
This reverses a prior policy – first implemented in 2010 and expanded in 2021 – that had allowed WHD to pursue liquidated damages during administrative investigations, often lengthening investigations significantly.
There are a number of implications for employers moving forward. First, employers can now likely settle administrative FLSA investigations without facing automatic double-damage demands. Second, because liquidated damages demands previously prolonged investigations, this policy is expected to streamline enforcement, enabling quicker administrative resolutions. Employers are well advised to engage experienced employment counsel immediately after being notified of a WHD investigation.
On July 27, 2025, the WHD announced that it is restarting the Payroll Audit Independent Determination (PAID) program. Under PAID, employers are encouraged to conduct audits and, if they discover FLSA or FMLA violations, can self-report those violations. Employers may then work in good faith with WHD to correct their mistakes and to quickly provide 100% of the back wages due or other remedies to their affected employees.
Whether or not a business is eligible to participate in PAID and whether it is advisable to participate is determined based on a number of factors. Employers that have not recently engaged in a self-audit of wage and hour practices should consider doing so now with experienced employment counsel.
