The Department of Labor (DOL) just rolled back a Biden-era practice of demanding that employers pay liquidated damages – in an amount equal to back pay – to resolve wage and hour investigations. The Trump administration delivered good news to employers on June 27 with new guidance stating that the DOL’s Wage and Hour Division (WHD) has no authority under the Fair Labor Standards Act (FLSA) to seek such damages when an employer wishes to resolve an investigation by paying back wages prior to litigation. This guidance marks a substantial shift in federal wage and hour enforcement and should pave the way for earlier and less costly resolutions of investigations. How will this new guidance impact employers and what are the top three takeaways?

How We Got Here

• Federal Wage and Hour Law: The FLSA established a federal minimum wage, overtime pay, and child labor standards. The law allows employees to sue for alleged violations and authorizes the Secretary of Labor to conduct investigations, supervise settlements, and bring lawsuits to enforce the act. The FLSA’s remedies include back pay and an equal amount of liquidated damages in lawsuits brought by employees or the Secretary of Labor.
• Seeking Liquidated Damages: For decades, the Secretary of Labor only sought liquidated damages if an employer did not resolve a WHD investigation and the DOL Solicitor’s Office filed a lawsuit. In 2010, however, the Obama WHD began requiring liquidated damages in an amount equal to its back...

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