Seyfarth Synopsis: The DOL’s Wage and Hour Division just scrapped its policy of seeking liquidated damages (double damages) in FLSA investigations. Why? Because it probably didn’t have the statutory authority in the first place, and doing so slowed down resolutions. Going forward WHD investigators are no longer allowed to demand liquidated damages in administrative settlements.
The U.S. DOL‘s Wage and Hour Division is the administrative division responsible for enforcing the FLSA’s minimum wage, overtime pay, and child labor provisions. The Division employs just over 600 investigators—about 25% less than a few years ago—to oversee and enforce the compliance of more than 6.2 million U.S. employers. By the numbers alone, the investigators have their work cut out for them.
Of course, doing more with less has been a well-known focus of the Trump Administration. That focus is shared—whether out of philosophy, necessity, or both—at WHD. Less than six months into the new term, the Division’s leadership has placed a greater emphasis on proactive education—ensuring that employers and employees understand their legal obligations and rights—and efficiency.
Take, for example, the DOL’s re-launch of its opinion letter program. This initiative provides an avenue for WHD to proactively address sometimes murky questions of how the FLSA applies in specific scenarios. In addition to providing clear answers for those who request an opinion letter, the process allows the Division to provide guidance to the broader regulated community.
But with just 600-ish investigators and an anticipated reduction in its discretionary spending budget, the question remains: How might the Division do more with less? WHD provided another answer to this question late last month.
On June 27, 2025, the Division issued Field Assistance Bulletin (FAB) No. 2025-3, marking a significant policy shift in its enforcement of the FLSA. WHD investigators are no longer authorized to seek liquidated damages during pre-litigation administrative investigations or resolutions.
This is a big deal. Recall that, in private litigation, liquidated damages (i.e., damages equal to any back wages owed) are presumed to be owed unless the employer proves to the court that the underlying FLSA violation was committed despite the employer’s good faith efforts to comply with the law. (You may be thinking (like we are) that WHD’s prior authority—now undone—to impose liquidated damages in an investigation looks like a presupposed conclusion that an employer did not act in good faith—and with no judge to consider evidence of that employer’s good faith.)
To some who deal with these issues every day, liquidated damages should never have been appropriate in WHD investigations. Aside from seeming to be a consequence of WHD usurping a determination typically reserved for a judge, they could have been perceived by the skeptics to be a punitive and sometimes political tool rather than a device meant to make employees whole and guide an employer toward compliance. So this development is somewhat of a corrective measure, so to speak.
But back to efficiency. Aside from being right under the law, FAB No. 2025-3 will streamline the resolution of FLSA claims determined as the result of a WHD investigation.
So What Happened?
FAB 2025-3 takes the place of prior bulletins that authorized WHD investigators to levy liquidated damages (including FABs 2020-2 and 2021-2). It reaffirms that the WHD’s relevant authority is limited to supervising the payment of unpaid minimum wages and overtime compensation—not to imposing liquidated damages.
This view stems from Section 16(c) of the FLSA, which empowers the Secretary of Labor to take enforcement action against employers under the Act and to supervise the payment of back wages. It’s the source for WHD’s power to investigate compliance. That’s different from Section 16(b), which provides the private right of action for an employee to file an individual or collective action brought on behalf of herself and others similarly situated to recover back wages and liquidated damages.
Based on the statute itself, liquidated damages are only available through judicial enforcement under Section 16(b) or through settlement of pending litigation.
That’s the Law, Now What About Efficiency?
Beyond legal (and, fine, nerdy) underpinnings, the FAB reflects WHD’s observation that seeking liquidated damages during administrative settlements delayed case resolutions by an average of 28%. Presumably that delay came from employers and their advisors rightly pushing back, and WHD investigators having to respond.
So, to eliminate that waste, WHD’s goal for FAB 2025-3 is to:
- Accelerate recovery of wages for affected employees;
- Reduce friction in settlement negotiations; and
- Allow more efficient use of WHD enforcement resources.
What Does This Mean in the Short-Term and the Long-Term?
If you’re an employer who agreed to pay liquidated damages as the result of a WHD investigation, and you finalized the agreement to do so before June 27, 2025, there’s probably not much you can do to get out of the agreement. The FAB is not retroactive.
If you’re in the midst of an investigation in which violations resulting in back wages may be found, you should not be asked to pay liquidated damages—and if you are, you should be ready to push back. While no investigator should try to slip that one by in light of the FAB, the DOL is a big place and WHD investigators are busy people—sometimes it takes a while for those in the field to learn about changes made in Washington, D.C.
Longer term, it’s worth doing a little tea-leaf reading. With so few investigators relative to the number of employers comprising our thriving U.S. industries, we expect WHD to continue to focus on initiatives meant to educate and guide employers to comply with the law. It simply won’t be feasible for the Division to enforce the law predominantly through investigations. Does this mean a return of the so-called PAID Program (Payroll Audit Independent Determination program), or other initiatives like it? Time will tell.
Of course, this does not mean that employers should disregard their obligations to pay employees lawfully. Indeed, it’s quite possible that, as WHD investigations diminish in number, the plaintiffs’ wage and hour bar will intensify their efforts to file suit across the states. It’s also possible that we will see increased enforcement activity at the local and state level (if you’re in California, think DLSE).
Instead of looking at this as some sort of lessening of WHD’s power, we encourage employers to consider whether the Division’s focus on education, guidance, and efficiency might open a door to permit a more conciliatory and collaborative approach in how employers interact with WHD. Consider whether it might be worthwhile to request an opinion letter regarding nuanced practices, where the law might not be so clear. And consider negotiating a resolution—without liquidated damages—if you happen to face a WHD investigation. After all, employees who receive back wage payments under WHD supervision (under Section 16(b)) can typically structure the process to achieve a release of claims that could have instead been pursued in litigation (under Section 16(c)). And if we’re right that private litigation will increase as WHD investigations diminish, closure through WHD could be a great thing to have.
Conclusion
FAB 2025-3 reflects a recalibration of WHD enforcement authority. By narrowing administrative settlements to actual back wages, the WHD is aligning more closely with its statutory limits while also seeking more efficient resolutions.
This change limits WHD to what the law actually allows, and it creates a path for faster, more predictable resolutions. Employers should stay compliant, stay alert, and consider whether WHD’s shift opens new doors for proactive engagement.
