Legal Alert

DOL Hits Pause on Collecting Liquidated Damages

by the Labor and Employment Group
June 26, 2020

On June 24, 2020, the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin changing the DOL’s typical practice of seeking liquidated damages in settlements in lieu of litigation. Specifically, Field Assistance Bulletin No. 2020-2 states that in order to close investigations under the Fair Labor Standards Act more quickly and return back wages to affected employees as soon as possible, the DOL will no longer seek pre-litigation liquidated damages from employers.

This guidance comes on the heels of President Trump’s Executive Order 13294, which requires the DOL to grant regulatory flexibility and relief to businesses as they work to recover from the impact of the COVID-19 pandemic.

The Bulletin went on to explain that the DOL will not assess liquidated damages if:

  • There is no clear evidence of bad faith and willfulness;
  • 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;
  • The employer has 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 other non-profits.

If any of the above situations apply, the DOL will only pursue back pay. Otherwise, any requests for liquidated damages must be approved by the Wage and Hour administrator and the Solicitor of Labor.

This new guidance gives businesses some much needed breathing room as they struggle to stay afloat during this unprecedented time, while keeping abreast of all the complicated pandemic-related rules.

Ballard Spahr’s Labor and Employment Group is closely following COVID-19 legislation and other developments related to COVID-19 as they impact the workforce. If you have any questions, please contact any member of the Labor and Employment Group for advice about your situation.


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