The last several years have been quite worrisome to me, as a management side practitioner, on the issue of USDOL agency-initiated liquidated damages assessments. It used to be that only when the USDOL took an entity to court did it seek liquidated damages. Then, some years ago, during the Obama Administration, the agency began seeking liquidated (i.e. double) damages. This was a big hammer for the agency and one that it utilized in almost a routine manner. Well, things have changed. For the better.

The USDOL has now issued a Field Assistance Bulletin (“FAB”) on June 24, 2020 in which it stated that it “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.” This is a great thing for employers and I believe it is not only right, but it is the fair thing to do.

The point is that the statute does not dictate that liquidated damages be imposed in every case. Although the statute allows for and provides for the seeking of such damages, it is not a mandate. It is also unclear whether this remedy is/was appropriate before a litigation had ensued. That has not precluded the agency, however, from imposing these damages in almost all cases, without (it seems) an analysis or a statement of reasons how the employer’s lapses showed evidence of bad faith or willfulness. . The agency did this as a hammer to “convince” employers to settle quickly for the “original” amount or face the looming specter of double damages. Many employers would accept this situation, rather than risk litigating the case because that, just on fees alone, would be a protracted and daunting proposition.

So, going forward, the agency will not assess liquidated damages unless there is a showing of bad faith or willfulness. Equally important, if the employer is a first-time offender or if the matter involves interpretation of white collar exemption issues and doctrine, no liquidated damages will be assessed. Last, but not by any means least, the agency (e.g. field office) will need to receive the approval from of the Wage & Hour Division Administrator and the Solicitor of Labor.

The Takeaway

As I said, this is right and fair. I am glad to hear this applies to first time offenders and to audits involving exemption issues, which are often murky, especially the administrative exemptions. Of the 300 employers I have defended in DOL audits and investigations, many of the cases involved exemption and I am truly glad to understand that such employers will not face liquidated damages in the future. As good a day as this is, employers beware. If Biden wins, things may revert.

The FAB became effective yesterday. Glory be the day!

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