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Wage and Hour Division Ends Practice of Seeking Liquidated Damages in Pre-Litigation Settlements

The US Department of Labor’s Wage and Hour Division announced a policy change that is sure to please employers facing administrative FLSA back wages claims. Effective on July 1, 2020, the Division will cease to routinely pursue liquidated damages when settling those claims pre-litigation.

The new policy results from a recent executive order that requires federal agencies to remove certain regulatory and enforcement barriers to economic prosperity. According to the Wage and Hour Division’s Administrator, Cheryl Stanton, administrative FLSA investigations involving liquidated damages take 28% longer than those that involve only back pay. According to Stanton, the new policy will reduce the time needed to conclude FLSA administrative cases and return back wages to employees more quickly.

Under the new policy, the Department of Labor will not assess pre-litigation liquidated damages if:

  • There is no clear evidence of bad faith or willfulness;
  • The employer’s explanation of the violation shows that it resulted from a bona fide dispute of unsettled FLSA law;
  • The employer has no history of violations;
  • The matter only involves individual coverage;
  • 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-profit organizations.

Additionally, each request for FLSA pre-litigation liquidated damages must be submitted to, and approved by, the Wage and Hour Division Administrator, the Solicitor of Labor, or their designates.

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