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US Department of Labor Ends Practice of Seeking Liquidated Damages during Investigations

In June 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) announced a major policy change when it issued a field assistance bulletin clarifying that it may not seek or collect the payment of liquidated damages in any administrative matter under the Fair Labor Standards Act. Section 216(c) of the FLSA authorizes the Wage and Hour Division to “supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee.” The statute does not authorize the Department to compromise claims for or recover liquidated damages except where an enforcement action is brought in litigation. Congress made clear that such damages are reserved for judicial proceedings and responsibility falls to the courts of law – not the Department of Labor. However, in 2010, under the Obama administration and again under the Biden administration, the WHD was directed to seek liquidated damages in the administrative investigation stage—prior to referral for litigation. This policy has now been reversed. Read the FAB 2025-3.

What are liquidated damages? Under the FLSA, liquidated damages are authorized for employees who bring private lawsuits to recover unpaid minimum wages or overtime compensation. Liquidated damages are an additional equal amount of wages to the alleged unpaid wages. These damages mean the employer would pay double damages to an employee who is successful in bringing an unpaid wage lawsuit.

Liquidated damages are reserved only for judicial proceedings. The FLSA provides that a court may decline to award liquidated damages if it determines that the employer acted in good faith and had reasonable grounds for believing its conduct was not in violation of the Act. This statutory language expressly vests the authority to evaluate an employer’s good faith defense—and to determine whether liquidated damages are appropriate—with courts, not WHD.

What does this mean? Going forward, it should be easier and quicker to resolve wage disputes with employees, which is good for all parties involved.

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