United States Department of Labor Will No Longer Seek Liquidated Damages in Wage and Hour Administrative Cases, by Keith J. Gutstein, Esq. and Christopher J. Turano, Esq., 7-7-2025

The U.S. Department of Labor’s (U.S. DOL) Wage and Hour Division (WHD) recently issued a field assistance bulletin (FAB) clarifying that it will no longer seek or collect the payment of liquidated damages in any administrative matter under the Fair Labor Standards Act (FLSA). 

Issued on June 27, 2025, the FAB clarifies that Congress intended liquidated damages to be awarded through judicial proceedings, placing that authority with the courts—not the U.S. DOL.

Section § 216(c) authorizes the Secretary of Labor to “supervise the payment of the unpaid minimum wages or the unpaid overtime compensation owing to any employee or employees under section 206 or 207” prior to the initiation of litigation, according to the FAB. The statute does not authorize the U.S. DOL to compromise claims for or recover liquidated damages except where an enforcement action is brought in litigation, WHD further notes.

“Section 260 confirms that liquidated damages are reserved for judicial proceedings. It 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. Because WHD lacks the authority to make this determination, it likewise lacks the authority to supervise the payment of liquidated damages in administrative matters,” as per the FAB.

Accordingly, effective June 27, 2025, WHD must limit all supervised payments under § 216(c) to the recovery of unpaid minimum wages or overtime compensation, the agency explains. The U.S. DOL may no longer request liquidated damages in any pre-litigation investigation or resolution.

Implications for Employers

This comes as welcome news to employers seeking to resolve unpaid wage claims prior to litigation. It reduces the financial risk of WHD investigations and may encourage earlier resolution of compliance issues.

Background

Historically, the U.S. DOL did not seek liquidated damages in the administrative investigation stage until 2010, when the Obama administration began seeking liquidated damages prior to referral for litigation, according to a U.S. DOL press announcement. WHD temporarily curtailed the practice in 2020 in issuing FAB 2020-2 under the first Trump administration.

The following year, the Biden administration issued FAB 2021-2, which rescinded the 2020 FAB and authorized the WHD to once again seek liquidated damages in administrative matters.

The recent issuance of FAB 2025-3 ends the WHD’s ability to seek such damages in administrative proceedings.

Next Steps

Though the U.S. DOL will no longer seek liquidated damages in an administrative manner, employers should still make sure they are complying with federal and state wage and hour laws. Unpaid wages and penalties issued by state departments of labor can still be significant. Therefore, all employers should consider:

• Reviewing wage and hour practices to ensure compliance with the FLSA and other applicable laws.
• Responding proactively to WHD investigations and seek legal guidance early in the process.
• Documenting compliance efforts and training to preserve potential good faith defenses.

The change took effect June 27, 2025, and applies prospectively. Kaufman Dolowich will continue to monitor developments.

Authors: Keith J. Gutstein, Chair of KD’s Labor and Employment Law Practice Group and Co-Managing Partner of the Long Island Office and Partner Christopher J. Turano