The U.S. Department of Labor (“DOL”) has announced a major change in how it enforces federal wage and hour laws. As of June 27, the DOL’s Wage and Hour Division (“WHD”) will no longer demand liquidated damages—an additional amount equal to back wages owed—when resolving investigations before litigation. This reverses a long-standing policy that had required employers to pay both back wages and liquidated damages to settle claims, even outside of court. The new guidance (Field Assistance Bulletin 2025-3) clarifies that the Fair Labor Standards Act (“FLSA”) only authorizes liquidated damages as a remedy in lawsuits—not during administrative investigations.
This change marks a return to the pre-2010 enforcement approach, where liquidated damages were typically only pursued once litigation was filed. Employers should benefit from this rollback, as the prior policy often delayed settlements and made early resolution of wage investigations more costly and complex. The DOL itself acknowledged that the practice added an average of 28% more time to resolve investigations. Now, with liquidated damages off the table during the investigative stage, employers may see faster, more predictable resolutions—provided they agree to pay back wages owed.
Importantly, this federal shift does not affect state wage and hour laws, many of which still allow for liquidated damages regardless of whether a case reaches court. And while the WHD’s pre-litigation authority is now more limited, employers remain fully responsible for complying with all FLSA requirements, including minimum wage, overtime, and child labor rules. Employers should also be aware that employees can still sue for back pay, liquidated damages, and attorneys’ fees. Legal counsel can help assess risk, respond to investigations, and ensure compliance in light of this evolving enforcement landscape.
If you have any questions about how this change may affect your business, please contact us at info@mnklawyers.com.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material