In an unsurprising move, the Biden administration announced the rollback of a Trump-era policy which will penalize businesses. Employers who violate the wage provisions of the Fair Labor Standards Act may be liable for liquidated damages. Liquidated damages double the amount of the actual wage damages awarded. To avoid such costly fines, employers must examine their worker classifications immediately. Those classified as exempt from overtime and other payroll and wage payment practices must meet the established criteria under DOL regulation. Also, employers should ensure their independent contractor relationships do not run afoul of the DOL’s definition.
Wage Violations Under the Trump Administration
Previously, the DOL Wage and Hour Division (WHD) investigators did not assess liquidated damages absent clear evidence of bad faith or a history of violations by the employer. The Trump administration issued this guidance in response to complaints that the DOL sought double damages too often and inconsistently during the Obama Administration. Trump’s DOL issued a policy limiting investigators’ ability to seek liquidated damages in pre-litigation settlements. If an investigator felt double damages were warranted, approval was needed from the WHD Administrator and DOL Solicitor.
Biden Administration Policy
On April 9, the WHD issued a field assistance bulletin revoking the Trump-era policy limiting the ability to seek double damages. Now, investigators are free to demand liquidated damages in the pre-litigation phase of investigations. However, the change in policy does not affect the availability of liquidated damages if the DOL files for ligation which was not altered during the Trump-era. Also, as always, an employee can seek liquidated damages in state or federal court, along with attorneys’ fees. The revised policy only affects the likelihood that employers can face liquidated damages during pre-litigation, investigative settlements. Regardless, employers should be alert to this policy change. It is clear that the DOL plans to be more proactive and aggressive in responding to complaints and initiating investigations.
In response, employers need to stay on top of developing policy changes with the DOL and elsewhere. NLRA constantly monitors compliance and regulatory developments on our Blog. If you’re unsure on how to proceed ask an expert. Speak to your in-house counsel for advice or Schedule a Free Consultation with NLRA today!
