Labor Department Reverses Trump Policy on Wage and Hour Violations

On April 9th, 2021, the U.S. Department of Labor (DOL) issued a field assistance bulletin regarding wage and hour violations. Published by the DOL's Wage and Hour Division (WHD), the bulletin's policy change will benefit workers and penalize violators. For example, employers who violate the Fair Labor Standards Act (FLSA) wage provisions may face additional liabilities. Violations would include any unpaid wages plus an additional equal amount as liquidated damages, referred to as "double damages." The WHD recently ended its Payroll Audit Independent Determination (PAID) program.

Background of the Policy

The concept of "double damages" is not new regarding wage and hour violations. In fact, the DOL enforced these penalties for years. However, in June 2020, the DOL began receiving employers' complaints on double damages. For example, employers complained that the DOL was seeking these damages inconsistently and too often during President Barack Obama's administration. As a result, WHD investigators, directed by President Donald Trump's administration, could not assess additional liquidated damages alone. In order to levy double damages, investigators needed approval from both the WHD and DOL Solicitor to pursue the penalties. As a result of the WHD's field bulletin, the previous Trump WHD policy is now immediately rescinded. Investigators now have greater discretion when seeking double damages for wage and hour violations. However, the WHD regional office leader must approval all pre-ligation demands for liquidated damages.

Employer Takeaways

In conclusion, the change in DOL policy does not impact the availability of liquidated damages in certain situations. For instance, the WHD can assess liquidated damages in DOL or employee cases filed in both state or federal court. Additionally, employees can also seek an award of their attorneys' fees. With this new policy, the DOL signifies that the agency plans to be more proactive when receiving complaints. As a result, employers should examine their worker classification policies and other wage and hour practices to avoid litigation.