On June 24, 2020, the United States Department of Labor issued a memorandum announcing a policy change among its Wage and Hour Division staff to suspend seeking liquidated damages in settlements of FLSA investigations. In this memorandum, the DOL notes one reason for the policy change as a recently issued Executive Order of the United States President that seeks removal of certain regulatory and enforcement barriers to minimize the economic effects of COVID-19 (i.e., Executive Order 13924).
The memorandum further states, in relevant part: “…to reduce the time needed to conclude FLSA administrative cases to return back wages to employees more quickly, [the Wage and Hour Division] will no longer pursue pre-litigation liquidated damages as its default policy from employers in addition to any back wages found due in its administratively resolved investigations.”
However, this policy change does not mean that the DOL will never pursue liquidated damages in its FLSA investigations. Per the DOL memorandum, “[e]ffective July 1, 2020, the Department will not assess pre-litigation liquidated damages if any one of the following circumstances exist:
- there is not clear evidence of bad faith and willfulness;
- the employer’s explanation of the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;
- the employer had 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 non-profits.
In addition, any request for pre-litigation liquidated damages must be submitted to and approved by both the Wage and Hour Division Administrator and the Solicitor of Labor. So, while the suspension of this practice is not absolute, many—if not most—FLSA investigations should be able to meet one or more of these criteria.
Nonetheless, it is always best practice to retain an attorney as a proactive measure to carefully review business and pay practices and ensure compliance with the FLSA and its regulations, prior to the initiation of any FLSA investigation by the DOL. Taking such a step is a classic measure by which employers can effectively raise a good faith defense to alleged violation(s) of the FLSA to avoid the imposition of liquidated damages. Contact our Firm if you are seeking more information on your legal rights and obligations under the FLSA.