Employment / 1 min read
On June 27, 2025, the DOL issued a field assistance bulletin announcing it will not seek nor collect payment of liquidated damages in any DOL investigation of a Fair Labor Standards Act investigation. https://www.dol.gov/newsroom/releases/whd/whd20250627
Liquidated damages are of course an assessment of a penalty of the same dollar sum as the DOL determines an employer has failed to pay in overtime or minimum wage. The new DOL position only impacts pre-suit settlement between the DOL and an employer during an agency audit.
The policy shift ends a practice first started during the Obama Administration when the DOL pushed for liquidated damages in nearly every audit requiring employers to show evidence of "substantial good faith" before the agency would negotiate off the doubling of alleged back wages. The Biden Administration softened the rule and applied standards for issuance of liquidated damages. The first Trump Presidency enforced a "heightened scrutiny" protocol that required regional offices to obtain approval of the Solicitor General before seeking liquidated damages.
The new Trump Administration obviously went vastly further with what appears to be an absolute bar against the DOL seeking liquidated damages. The DOL press release makes this clear: "Today, the issuance of FAB 2025-3 ends the division's ability to seek such damages in administrative proceedings. Ending this practice will foster more effective dispute resolution and ensure more fair, timely outcomes for American workers and businesses."
Employers should be pleased, but cautious. Remember, DOL local investigators advise workers of their right to reject a DOL negotiated settlement to pursue an individual claim or initiate a collective action where they may seek liquidated damages. The DOL may also initiate litigation where it deems an employer so egregious that it deems liquidated damages necessary to correct an injustice.
The new rule will help most employers. That said, in some situations an employer with challenging circumstance may decide that paying liquidated damages is a more attractive alternative to litigation.