On June 26, 2025, the U.S. Department of Labor (DOL) issued Field Assistance Bulletin (FAB) No. 2025-3, formally rescinding FAB 2021-2 and eliminating the authority of the Wage and Hour Division (WHD) to seek liquidated damages in administrative settlements under the Fair Labor Standards Act (FLSA). This change marks a significant shift in how wage and hour violations may be resolved prior to litigation.
Key Changes
Effective June 27, 2025:
- No Liquidated Damages in Administrative Matters. The WHD may only supervise payment of unpaid minimum wages or overtime compensation under FLSA Section 216(c). Liquidated damages may only be pursued through litigation.
- Withdrawal of FAB 2021-2. The prior guidance that authorized WHD, with Regional Solicitor concurrence, to seek liquidated damages during administrative investigations is now rescinded.
- No Pre-Litigation Negotiations Involving Liquidated Damages. WHD is now prohibited from seeking, negotiating, or endorsing liquidated damages in any form unless a lawsuit is filed.
Background
Historically, WHD resolved most FLSA claims administratively by supervising payments under Section 216(c). Beginning in 2010, WHD began including liquidated damages in some of these matters. While FAB 2020-2 had temporarily curtailed this practice, FAB 2021-2 reauthorized it, until now.
The DOL now affirms that liquidated damages are judicial remedies intended to be awarded only by a court. Section 260 of the FLSA further reinforces this, granting courts, not administrative agencies the authority to determine whether liquidated damages are appropriate based on an employer’s good faith defense.
What This Means for Employers
- Administrative Settlements Limited to Back Wages. Employers under WHD investigation can now resolve matters by paying only unpaid wages or overtime, without the additional cost of liquidated damages, unless litigation is initiated.
- Litigation Still Permits Liquidated Damages. The Solicitor’s Office retains the right to pursue liquidated damages through the courts if a lawsuit is filed.
- Existing Agreements Not Affected. This change applies prospectively. Any settlements including liquidated damages agreed to in writing prior to June 27, 2025, remain valid.
- State and Local Wage Laws May Still Apply. Employers should remain vigilant about state and local wage and hour laws, which may allow or even require liquidated damages in administrative or non-judicial settlements. These laws often impose stricter standards than the FLSA, and compliance with federal law does not automatically ensure compliance at the state or local level.
Next Steps for Employers
To align with the DOL’s updated enforcement approach, employers should:
- Review Compliance Practices: Ensure wage and hour practices comply with FLSA and applicable state/local standards to avoid enforcement actions.
- Clarify Resolution Strategies: Understand that future WHD settlements will not involve liquidated damages unless litigation is pursued.
- Assess Multi-Jurisdictional Risk: Employers operating in multiple states should assess how state and local laws differ from the FLSA, especially regarding penalties and remedies.
- Monitor Legal Developments: Stay informed on federal, state, and local regulatory updates that may impact wage and hour compliance.
HR Works will continue to monitor this topic and provide updates as more information is made available.
