Department of Labor Ends Policy Favoring Pre-Litigation Pursuits of Liquidated Damages
Department of Labor Ends Policy Favoring Pre-Litigation Pursuits of Liquidated Damages
Bayan Biazar, Associate
On June 27, 2025, the Department of Labor (“DOL”) issued Field Assistance Bulletin 2025-3 (“FAB 2025-3”) effectively rescinding the DOL’s prior practice of assessing (or threatening to assess) liquidated damages at the administrative investigation phase of wage and hour complaints under the Fair Labor Standards Act (“FLSA”). In other words, per FAB 2025-3, the DOL will only seek awards of liquidated damages for wage and hour violations once they are actually litigated, and either an award or a settlement is reached.
The History of the DOL’s Assessment of Pre-Litigation Liquidated Damages
Historically, the DOL’s Wage and Hour Division (“WHD”) could only seek liquidated damages for wage and hour violations resolved through litigation, not through administrative investigations.[1] In 2010, the Obama administration ended this practice and gave the WHD the expanded authority to recover, assess, or threaten to assess liquidated damages during the investigative period of administrative proceedings. This expansion lasted for ten years until the Trump administration, in 2020, issued FAB 2020-2, which placed guardrails on the Obama administration-supported expansion of authority. FAB 2020-2 explained that the practice of seeking liquidated damages in the investigative stage of administrative proceedings extended the length of these investigations by 28%, resulting in a delay in potential recovery for affected workers.[2]
FAB 2020-2 was in effect for one year until, in 2021, the Biden administration issued FAB 2021-2. FAB 2021-2 rescinded FAB 2020-2 and once again gave the DOL unhindered authorization to seek, assess, or threaten to assess liquidated damages for wage and hour violations brought under the FLSA in the administrative setting.
FAB 2025-3
FAB 2025-3 has now, once again, ended the DOL’s ability to assess or seek liquidated damages in any administrative matter brought under the FLSA for wage and hour violations. It is the position of the DOL, as set forth in FAB 2025-3, that the powers given to the DOL by Congress do not include the authorization of the assessment of liquidated damages. In support of this position, FAB 2025-3 reasons that “where statutory text is silent, an agency may not infer additional enforcement powers unless that inference is clearly supported by structure or context.” Upon review of 29 U.S.C. § 216(c), the statutory language does not discuss or appear to infer the authorization of liquidated damages in administrative proceedings. It does, however, reference the authorization of an award of liquidated damages in judicial proceedings, which is in line with FAB 2025-3.
It is important to note that the enforcement of FAB 2025-3 does not limit the ability of the Solicitor of Labor (“SOL”) and its Regional Solicitors (“RSOLs”) to seek liquidated damages when filing a lawsuit, however, it does limit the DOL’s ability to seek liquidated damages in matters which it does not intend to actually litigate.
Key Takeaways
The issuance of FAB 2025-3 should have a lasting effect for both employers and employees alike. Theoretically, employees should no longer have to worry about extended and drawn-out administrative investigations which could result from the DOL attempting to assess liquidated damages against employers for wage and hour violations brought under the FLSA. Employers, on the other hand, do not have to worry about the threat or assessment of liquidated damages against them for wage and hour violations resolved administratively. Campbell Litigation will continue to monitor FAB 2025-3 and other FABs which could directly impact Colorado employers.
[1] See https://www.dol.gov/newsroom/releases/whd/whd20250627.
[2] See https://www.dol.gov/sites/dolgov/files/WHD/fab/fab2025-3.pdf?36x3b0mu7fg for the full text of FAB 2025-3.