Takeaways
- The DOL will no longer seek liquidated damages during investigations unless a court orders them following a lawsuit.
- The DOL will disregard the 2024 independent contractor rule and revert to longstanding common-law standards.
- The Opinion Letter Program has been reinstated, offering employers clearer compliance guidance under the FLSA.
It's been just over 100 days under the new Administration. We have a new Secretary of Labor, and we're on the cusp of most of the other nominees for key DOL positions being confirmed by the Senate. Even with some key posts unfilled, during this short period, a number of key shifts in DOL enforcement policy have occurred. Here is a summary of just a few.
- Liquidated Damages. On June 27, 2025, the DOL
updated the manual used by its investigators by stating that they
are no longer authorized to assess liquidated damages tied to
findings of violations from DOL investigations or audits.
Liquidated damages under the Fair Labor Standards Act are amounts
equal to any overtime or minimum wages found to be unpaid, so that
the underpaid employee can get double the amount of the
underpayment.
Prior to the Obama Administration, the DOL did not seek liquidated damages except in cases it filed in federal court against employers. This changed under the Obama Administration, came to a virtual stop in the first Trump Administration, and returned under the Biden Administration. Employers questioned the DOL's authority to make such assessments on its own, i.e., outside of the context of a lawsuit. These assessments, employers contended, were not only legally suspect, but they also frustrated the prospects of pre-lawsuit settlements.
Under the policy just announced, the DOL noted that the Fair Labor Standards Act is clear on this point; liquidated damages may only be assessed by a court after finding that the Act was violated. The law, the Bulletin stated, does not permit liquidated damages to be assessed by the DOL prior to the filing of a lawsuit.
Therefore, if a DOL audit now finds that underpayments were made, the DOL cannot demand that employers pay liquidated damages in addition to making up for underpayments. Therefore, if there's an underpayment finding, the employer can settle based on that amount without the threat of paying double. If the parties do not settle and a lawsuit is then filed, then the employer may be exposed to paying liquidated damages should it not prevail or fail to establish any "good faith" affirmative defense. - Independent Contractors. Over the past decade or so, the DOL has endeavored to create a uniform definition of who can be considered an independent contractor and not an employee, and thereby not be subject to the Fair Labor Standards Act. Under some administrations, the DOL's standard for being an independent contractor was more stringent than those already set by the courts, and in other administrations, the threshold was lower. The most recent effort was in 2024 under the Biden Administration. Challenges to that rule are still pending in the courts. Meanwhile, on May 1, 2025, the Trump Administration announced that it would not apply the Biden DOL rule in its proceedings and instead would apply the long-standing common-law standards applicable within the various judicial circuits.
- Opinion Letters. On June 2, 2025, the DOL announced that it would jump-start its Opinion Letter Program, a program that was effectively dormant for the past four years. Opinion Letters are sought by parties who wish to have the DOL weigh in as to a pay practice in place or being considered and to determine if the DOL considers the practice consistent with the Fair Labor Standards Act. If the DOL concludes that the practice is legal, then any employer who relies on the Opinion is insulated from being assessed lost pay and liquidated damages at least up to a point that a court disagrees. Employers have welcomed this change as they try to make sure their practices comport with the law, a law that at times is quite nuanced and complex.
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