Big Win for Employers: DOL Won’t Demand Double Damages in Wage and Hour Investigations

 

If the Department of Labor comes knocking about unpaid wages, here’s some welcome news: as of June 27, 2025, it can no longer demand liquidated damages—unless it sues you.

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TL;DR: In Field Assistance Bulletin (FAB) 2025-3, the U.S. Department of Labor announced that its Wage and Hour Division (WHD) can no longer seek liquidated damages in administrative investigations under the Fair Labor Standards Act (FLSA). That means employers resolving matters with the DOL—without going to court—are now only liable for back wages.

📄 Read the full Field Assistance Bulletin (FAB) 2025-3 here

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A Major Shift in Enforcement—and Leverage

For years, WHD investigators routinely asked employers to pay not just back wages, but an equal amount in liquidated damages—often before a lawsuit was ever filed. That practice is now over.

According to FAB 2025-3:

• WHD can only supervise the payment of unpaid minimum wage or overtime.
• Liquidated damages are off-limits in administrative settlements.
• The DOL’s Solicitor’s Office won’t even consider liquidated damages unless litigation is underway.

This restores a much-needed balance to the pre-litigation process. Employers now have a real opportunity to resolve issues early—without automatically facing double liability.

What Employers Need to Know

This is a meaningful policy change with immediate benefits:

✅ Stronger settlement position
Without the threat of liquidated damages, employers regain real leverage during DOL investigations.

✅ Streamlined resolutions
The DOL previously admitted that seeking liquidated damages slowed investigations by nearly a third. This policy should speed things up—for everyone.

✅ Lower financial exposure
Unless the DOL sues, employers can now settle wage and hour claims with the agency for back wages only—not a doubled-up penalty.

That said, once litigation begins, liquidated damages are still in play. Courts can award them unless the employer proves good faith and reasonable grounds.

Be Proactive—Not Just Reactive

This doesn’t give employers a free pass. The most cost-effective strategy is still compliance:

✔️ Regularly audit pay practices
✔️ Review exemption classifications
✔️ Train managers on timekeeping and overtime rules
✔️ Fix issues promptly

Avoiding a DOL investigation altogether is always the best outcome. But if you’re under the microscope, this bulletin makes early resolution a much smarter play.

Watch for State Enforcement and Private Lawsuits

This change only applies to federal administrative settlements under the FLSA. Many state labor agencies still impose penalties or liquidated damages as part of their investigations—and nothing here affects their authority.

And don’t forget: employees can still recover liquidated damages in private FLSA lawsuits, where they’re entitled to an amount equal to their unpaid wages unless the employer proves good faith.

So while this bulletin gives employers an edge in DOL investigations, the broader legal landscape still requires caution.

The Bottom Line

With this bulletin, the DOL just gave employers a clearer—and cheaper—path to resolving wage and hour investigations. Liquidated damages are off the table unless the government is prepared to sue, which makes early settlement more attractive than ever.

If you’re facing a DOL investigation, now is the time to take a hard look at resolution. You may not get a better offer.