Efficient July 1, 2020, the U.S. Division of Labor (DOL) will pull again on looking for liquidated damages in pre-litigation settlements of wage claims and investigations. The change in coverage, introduced in Area Help Bulletin 2020-2, is critical, as liquidated damages can equal 100% of the again pay deemed to be owing, doubtlessly leading to “double damages” for wage violations.
The coverage change comes on the heels of an government order President Trump signed in Might 2020, directing federal businesses to make use of deregulatory actions to spur financial exercise in mild of COVID-19 shutdowns. Consistent with that order, the DOL’s Wage and Hour Division (WHD) will cease looking for liquidated damages in most pre-litigation disputes, discovering that resolutions involving liquidated damages take 28% longer to conclude than those who search solely again wages. WHD should assess and search liquidated damages in circumstances involving unhealthy religion and willfulness on the a part of the employer, however looking for such a treatment will now be the exception, not the rule.
Per the brand new steering, WHD is not going to assess pre-litigation liquidated damages if any of the next circumstances exist:
there is no such thing as a proof of unhealthy religion or willfulness;
the employer’s rationalization for the violation exhibits that it was the results of a bona fide dispute of unsettled regulation below the Honest Labor Requirements Act (FLSA);
the employer has no earlier historical past of violations;
the matter includes particular person protection solely;
the matter includes state and native authorities businesses or different non-profits;
the matter includes “advanced” FLSA § 13(a)(1) or § 13(b)(1) exemptions.
FLSA § 13(a)(1) exempts from each minimal and time beyond regulation pay protections bona fide government, skilled, and administrative workers, in addition to outdoors gross sales workers. The § 13(a)(1) exemptions, also known as the “white collar” exemptions, have been the topic of appreciable litigation since 2004, when the federal laws deciphering these exemptions have been revised considerably. FLSA § 13(b)(1) gives an time beyond regulation exemption for sure workers who’re topic to Division of Transportation laws.
The steering requires that requests for pre-litigation liquidated damages be submitted to each the WHD Administrator and the Solicitor of Labor for approval.
Liquidated damages are pricey, and because the DOL acknowledges, can typically be a barrier to a pre-litigation resolution to a wage dispute. The DOL’s change in enforcement place needs to be a welcome growth for employers going through federal wage investigations.
© 2020 Proskauer Rose LLP. Nationwide Regulation Evaluate, Quantity X, Quantity 179