Department of Labor Will Generally Forgo Assessing Pre-Litigation Liquidated Damages
By Aaron Chaet
On June 24, 2020, the Department of Labor (the “DOL”) issued a Field Assistance Bulletin providing that effective July 1, 2020, the DOL will no longer pursue pre-litigation liquidated damages in all cases in its administratively resolved investigations.FN1 Under the Fair Labor Standards Act (“FLSA”), employees pursuing claims for an employer’s failure to pay minimum wage or overtime are able to recover back pay, which is the amount allegedly owed, as well as liquidated damages, which is often equal to 100% of the back pay.FN2
Under the new guidance, the DOL will not seek liquidated damages in settlements in lieu of litigation if any of the following circumstances exist:
there is not clear evidence of bad faith and willfulness;
the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;
the employer has no previous history of violations;
the matter involves individual coverage only;
the matter involves complex section 13(a)(1) and 13(b)(1) exemptions; or
the matter involves State and local government agencies or other non-profits.FN3
Additionally, all requests for pre-litigation liquidated damages under the FLSA must be approved by the Wage and Hour Division Administrator and the Solicitor of Labor on an individual basis.FN4.
Takeaway
The DOL’s change in policy is a response to the ongoing challenges faced by employers due to the economic effects of COVID-19 and is a welcomed development for employers currently facing FLSA wage claims. Given that liquidated damages are equivalent to 100% of back wages found due, it has often been a barrier to pre-litigation settlements. Please contact the attorneys at Campbell Litigation, P.C. for guidance regarding the DOL’s new stance on pursuing pre-litigation liquidated damages.
Footnotes:
FN1: Field Assistance Bulletin No. 2020-2, June 24, 2020 accessible at https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fab_2020_2.pdf
FN2: 29 U.S.C. §216(b)
FN3: See FN1
FN4: Id.