Expect The Unexpected, But Also Expect The Expected – Department Of Labor Updates Their Liquidated Damages Practices for Settlements in Lieu of Litigation

“They got the money, hey, you know they got away, they headed down south and they're still running today, Singin' go on take the money and run” – Steve Miller Band

As a surprise to absolutely no-one, on April 9, 2021 the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) published Field Assistance Bulletin No. 2021-2 rescinding Field Assistance Bulletin 2020-2. FAB 2020-2 was published on June 24, 2020 and stated that DOL will not assess pre-litigation liquidated damages if any of the following circumstances exist:

·       there is not clear evidence of bad faith and willfulness;

·       the employer’s explanation for the violation(s) show that the violation(s) were the result of a bona fide dispute of unsettled law under the FLSA;

·       the employer has no previous history of violations;

·       the matter involves individual coverage only;

·       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-profits.

The justification for Field Assistance Bulletin No. 2020-2 was that investigations involving liquidated damages take 28% more time than those involving back wages only. By not seeking pre-litigation liquidated damages the WHD could return back wages more quickly. Of course, the other side of the argument is that liquidated damages often double the amount due to employees from employers who commit wage and hour violations. As an employee, I would consider that a longer investigation to double the money due to be a good investment. This is likely to be the largest motivator for the new WHD who published FAB 2021-2 rescinding the departments prior practice.  

This Field Assistance Bulletin returns the WHD to the prior practice of seeking liquidated damages in cases where the employer was unable to set forth a good faith defense to the wage and hour violations. To the untrained eye, this may not seem like a large shift from the policy put in place on June 24, 2020 but the previous policy shifted the burden of proof for bad faith and willfulness to the investigator, where it generally remains with the alleged violator during litigation. In addition, employers with no previous history of violations would not have had to pay liquidated damages regardless of subjective intent and a mountain of evidence against them.

This Field Assistance Bulletin maintains a trend of erasing many of the policies and practices of the Trump administration. This Bulletin was released two days from our previous blog on a similar topic regarding the Payroll Audit Independent Determination Program on April 7, 2021. You can view that previous blog here: https://www.awrcounsel.com/blog/2021/4/7/another-trump-era-program-fails-to-survive-the-administrations-transition.