WHD Limits Supervised Payments, No Liquidated Damages

U.S. Department of Lab or Wage and Hour Div ision June 2 7, 20 25 F ield A ssistance B ulletin No. 202 5-3 MEMORAN DUM FO R: R egional Adminis tr at or s District Director s FR OM: Donald M. Harrison, II I Acting Administr a tor SUBJECT: Pro hibition on Seeking Liqu idated D amag e s in Adminis tr ativ e Settlement s under the FLSA This Field Assist ance Bulle tin (F AB) resc inds F AB 2021 - 2 a nd clarifies tha t the W age and Hour Division (WHD) may n o t super vise the p ayment of liquidated dam ages in an y administ r ativ e matte r under the F air Labor Standar ds Act (FLS A). Section 216(c) of the FLS A authoriz es WHD t o “ s uperv ise t he pa yme nt of the unpai d minimum wag es or the unpaid ov ertime c ompensa tion owing to any em ploy ee. ” T he st a tut e does not authoriz e the Departmen t to com promise claims f or or rec ov er liquidat ed damages e x cep t where an enforcement acti on is brought i n liti gation. Accordingly, effective June 27, 2025, WHD must l imit all supervised pay ments under § 21 6(c) to the recove ry of unpaid minim um wages or overtim e compensation. The Depar tme nt may no l onger reque st li quid ate d damage s in a ny pr e - litiga tion investigation or res olution, i ncludi ng tha t the Sol icitor ’s Offi ce will not se ek liquidated damages prior to filing a law s uit. Backgr ound A federal age ncy may ex ercis e only the a uthori ty that Co ngre ss has clea rly delega ted t o it. Where stat utory text is silen t, a n agenc y m ay not in fer additi onal enfo rce ment powers unl ess tha t inf erence is c lear ly suppor ted by str uctur e or cont ext. With respec t to liquidated damages, C ongress has authorized their a ward only in judicial procee dings — not in administrative matters under § 216(c). The Solicitor of Labor (SOL) and its Regional Solicitors (RSOL) have historic ally sought liquidated da mages when resolving FLSA violations t hrough litigation or litigatio n - related settl emen t. In 2010, howeve r, the WHD began to seek liqui date d damag es in the admi nistr ative i nves tiga tion s tage — prior to re ferral for liti gation. This practice was initially as serted to b e permissible under 29 U.S.C. § 216 (c), whic h gover ns De partm en t - supervi se d payme nt s of unpaid m inim um wa ges o r over time compe nsati on. Th e in cl u sion of li qui dated damages in administrativ e matters gradually expanded across WH D offices. WH D tempor ari ly cur tai led the practice in 2020 in i ssu ing FAB 2020 - 2, whi ch ex pla ined t hat t he prac tice of see king liq uidated dam ages in th e administrative investigation stage ex tended the l ength o f this stag e by 28 percent and, c orrespondingly, delayed recovery to affe cted workers. Subs eque ntly, WHD expa nd ed the practice again. It replaced FAB 2020 -

2 2 with FAB 2021 - 2, whic h expli citly authorized WHD, with conc urrenc e fr om R SOL, to seek liquidat ed damages in administrative matters. Upon re consi dera tion, th e Depar tmen t belie ves WH D is not authori ze d to seek li quid ated damag es as part of any payment it su pervise s under § 216(c) and WHD will disc onti nue e ngag ing with RSOLs on th is i ssu e. Most FLSA claims are res olved by means of § 216(b), which aut hori zes em ploye es to bring priva te l awsuits to recover unpaid minimu m wages or overtime compensatio n and provides for “ an additional equal amount as liquidated damages.” This languag e authoriz es m anda tory li quida ted dama ges, un less the em ploy er pro ves good faith and reasonable grounds under 29 U.S.C. § 260. These damages are available either thro ugh employee lawsuits or li tigation initiated by the Se cretary of Labor. P ortion s of §216(c) and § 21 7 reflec t the availability of these rem edies as well. I n ea ch context though, liquidated damages are a part of a j udicial proces s tha t affords the par ties due proce ss pro tec tions. Section § 216(c) authorizes the Secre tary of Labor to “super vise the pay ment of th e unpa id mini mu m wages or the unpa id ove rtim e co mpens atio n owing to any empl oyee or em ploy ees under s ectio n 206 or 20 7” prior to the ini tiati on of litigation. I t allows the Secre tary to reso lve wage violations administratively by sup ervis ing the paymen t of these back w ages only. The abse nce of t he term “li qui dated dama ges” wi th res pec t to t he supervision of payments prior to litigatio n, in contrast to the repeated inclusion of t he term “liquidated damages” when discus si ng recov ery and e nforce ment in t he litig ati on conte xt, is notabl e. As su ch WHD m ay not supervise the payme nt of suc h poten tial li quida ted dam ages in a dministrative matters. Section 260 confirms tha t liquidated damages are reserved for judic ial proc eedings. It provi des th at a c ourt may decline to award liq uidated damages if it determines that the em ploy er ac ted i n go od fai th a nd ha d reasona ble gr ou nds for bel ieving its c onduc t was not in viola tion of the Act. This statu tory la nguag e ex press ly vests the aut hori ty to eval uate an empl oyer’ s go od fa ith de fense — and t o de term ine wheth er li qui dated damag es are appropria te — with cour ts, no t WHD. Be cause W HD lack s the aut hority to make t his determination, it likewis e lacks the au thority to s upervise the pa ymen t of liqui date d damag es in administrative matters. T he structure of § 260 rei nforces that liquidated damages are a judicial remedy, a nd not an administrative tool available. The De partm ent f urther re cogniz es t his limitation bas ed o n a fundamental principle of administrativ e law: a federal agency may act o nly when Congress has clearly gran ted it the authority to do so. Congress has not clearly granted t he Department the auth ority to s upervi se the pay men t of li quidate d dam ages i n administrative matters. Any at tempt to do so exceeds the Depar tme nt’s a uthority. Accordingly, FAB 2021 -2, which a uthor izes WHD to supervise the payme nt of liquidated damag es in administrative matters, i s wit hdrawn effec tiv e June 27, 2025. This policy change applies prospectively and doe s no t aff ect matters where liquidated damag es have been agr eed to i n writi ng befo re J une 27, 2025. Enf or ceme nt Gui dance The W HD may no t supervise the p ayment of liquidated damages in administrative matter s under § 21 6(c). Th is prohibition is not limi te d to any partic ular action or ph ase in a matter. It i ncludes any ma nner o r method of seeking, pursuing, i m posing, accepting, endorsing, approving, encouraging, leveraging, or otherwis e suppor t ing in any way the payment of liq uidated damages before the filin g of a la wsui t. This positi on does not limit RSO L ’ s ability to see k liquidat ed damages whe n fi lin g a lawsuit, but as a n enfor cement pos ition i t d oe s cor res pondi ngly limit the De partment ’ s ability t o seek liquida te d dama ges in a ma tt er t hat it does not in te nd to l itigate. Moreo ver, liquidat ed damages will be permitt ed only in matt er s where the Departmen t files a lawsui t and, in accor dance wit h the law of the r elev ant jurisdiction, a settl emen t or awar d is reac hed.