Wednesday, April 14, 2021

DOL reopens the floodgate to liquidated damages in wage and hour investigations

The Department of Labor's breakup with liquidated damages in wage and hour investigations lasted only four years. Late last week, the agency announced that it would again seek liquidated damages (an amount equal to the unpaid wages themselves) in investigations, undoing a  policy change made by the Trump administration.

According to the DOL, it will "return to pursuing liquidated damages from employers … in its pre-litigation investigations provided that the Regional Solicitor of Labor or their designee concurs with the liquidated damages request.… Liquidated damages shall not be assessed by WHD where the employer has set forth credible evidence of a good faith defense or the where the RSOL deems the matter inappropriate for litigation."

What does this mean for your business? You have twice the financial stake in getting your wage and hour house in order as soon as possible. If the DOL investigates, you should expect to pay double what you would have in the past four years. Your $X in unpaid wages will take $X*2 to settle with the DOL. If your only defense to these liquidated damages is "credible evidence of good faith," you better take steps to create that good faith now, such as by having your employment lawyer sign off on how you classify and pay your employees. Once the DOL comes knocking, it will be too late.

* Image by Chris Gallagher on Unsplash