DOL Brings Back Double Damages For Wage Violators
Law360, April 9, 2021
By Mike LaSusa
Employers who violate federal wage and hour laws could once again be on the hook for double the amount of allegedly unpaid wages after the U.S. Department of Labor on Friday announced it is loosening Trump-era restrictions on the practice of seeking so-called liquidated damages.
The DOL axed two previous memos put out during the Trump administration, which had upended the agency’s longstanding default policy of seeking liquidated damages to resolve Fair Labor Standards Act claims before filing a complaint.
“Both of those documents are rescinded and [the Wage and Hour Division] will return to pursuing liquidated damages from employers found due in its prelitigation investigations,” principal deputy administrator of the DOL’s Wage and Hour Division, Jessica Looman, wrote in the memo, known as a field assistance bulletin.
The Trump administration curtailed the practice of seeking double damages in July 2020 as part of the former president’s push to cut red tape to help the economy rebound during the COVID-19 pandemic.
Under the Trump-era rules, the agency would not pursue prelitigation liquidated damages without clear evidence of bad faith and willfulness. It also wouldn’t seek double damages if the violations stemmed from a “bona fide dispute of unsettled” FLSA law, if the employer didn’t have a history of violations, or if the case only involved individual coverage.
The new guidance released Friday instructs top regional WHD officials to consult with their counterparts in the DOL’s legal branch “on a case-by-case basis” before seeking prelitigation liquidated damages.
“WHD may not make a demand for liquidated damages without first obtaining concurrence from the [regional solicitor] or designee,” Looman said. “Liquidated damages shall not be assessed by WHD where the employer has set forth credible evidence of a good faith defense or where the [regional solicitor] deems the matter inappropriate for litigation.”
In a separate statement posted on the DOL’s blog, Looman said the policy change is intended to incentivize employers to follow the law.
“As we move toward the economic recovery our country so desperately needs, we also need to ensure that the workers our nation relies on are paid for their work,” Looman said.
Employers had expressed concerns ahead of Biden’s inauguration that the new administration might bring back liquidated damages, and the announcement of the change in course didn’t come as welcome news for management-side attorneys.
Brett Bartlett, a partner at management-side firm Seyfarth Shaw LLP, said the return of double damages could incentivize employers to dig in their heels rather than cooperate when faced with a DOL probe.
“Loosening the constraints on the ability to seek liquidated damages at the investigation level will ultimately impede the progress of investigations because it will make them more akin to private litigation,” he said.
Bartlett also said it seemed unworkable for WHD to consult the DOL’s legal branch on basically every case.
“That is kind of crazy to me considering the limited resources that the Wage and Hour Division and the Solicitor’s Office have,” he said.
“Without liquidated damages, as under Trump’s Labor Secretary, employers basically suffered no consequences even after being found to have stolen from their employees,” Schwartz said. “This returns the FLSA to how it has been interpreted and enforced for many decades.”
–Additional reporting by Dorothy Atkins. Editing by Haylee Pearl.
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