Double the Trouble: DOL’s Newest Update on Damages for Wage Claims

In a field assistance bulletin issued on April 9, 2021, The Department of Labor (DOL) revoked a policy that limited the ability of Wage and Hour Division (WHD) investigators to assess liquidated damages on employers who violate the overtime or minimum wage provisions of the Fair Labor Standards Act (FLSA). Liquidated damages, here, refers to the employer being liable for an additional amount that’s equal to the unpaid wages. In other words, the employer would owe double the amount of back pay. Previously,  liquidated damages were limited to certain situations, such as when there was clear evidence of bad faith and willfulness by the employer or the employer had a history of violations.

Starting April 9, 2021, WHD investigators can pursue liquidated damages even if there was no clear evidence of bad faith and willfulness by the employer or a history of violations. WHD investigators will just need their Regional Solicitor’s approval to pursue liquidated damages. However, liquidated damages will not be assessed in cases where the “employer has set forth credible evidence of a good faith defense or where the Regional Solicitor deems the matter inappropriate for litigation.”

This recent policy change by the DOL suggests the DOL will be more proactive in initiating investigations. Given this and the recent policy change, employers should take this opportunity to review their classification of employees as exempt from overtime. Employers should also review their classifications of independent contractors and other wage practices, as the cost for not complying with the FLSA has just gone up.

Employers Council is here to help; feel free to contact us with your questions.