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DOL Ends Default Policy of Automatically Seeking Liquidated Damages in Wage and Hour Settlements

For nearly a decade, the U.S. Department of Labor’s (“DOL”) “default rule” in settling a wage and hour claim prior to litigation actually being filed has been to demand double the amount of back pay (i.e., the amount of back pay due, plus an equal amount in liquidated damages). While the Fair Labor Standards Act (“FLSA”) certainly provides the DOL with the option to seek liquidated damages, it is not required, and thus a little surprising that the DOL would admit this was their “default rule” for so long. However, in a Field Assistance Bulletin (“FAB”) dated June 24, 2020, the DOL announced a departure from this default position in response to President Trump’s Executive Order 13924, Regulatory Relief to Support Economic Recovery.

Beginning July 1, 2020, the DOL will not assess pre-litigation liquidated damages if any of the following circumstances exist:

  1. there is not clear evidence of bad faith and willfulness;

  2. 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;

  3. the employer has no previous history of violations;

  4. the matter involves individual coverage only;

  5. the matter involves complex section 13(a)(1) and 13(b)(1) exemptions; or

  6. the matter involves State and local government agencies or other non-profits.

In addition, each request for pre-litigation liquidated damages under the FLSA must be submitted to, and approved by, both the Administrator of the Wage and Hour Division of the DOL and the Solicitor of Labor (or either of her designees) on an individual basis.

Thus, while the FAB adds more steps and procedural safeguards to the DOL’s attempt to impose pre-litigation liquidated damages, it is a benefit for employers who are doing their best to interpret and apply the, at times, very confusing and nuanced FLSA and its related regulations.

Employers with questions are advised to consult with their legal counsel regarding specific questions or concerns. If you have any questions, or need assistance, please feel free to contact Jeremy D. Iosue or Jason T. Hartzell at (216) 651-0451.

This Employment Law Alert provides an overview of specific federal and/or state rules. It is not intended to be, and should not be construed as, legal advice for any particular situation or individual.

Copyright © 2020 Stefanik Iosue & Associates, LLC. All rights reserved.

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