On June 27, 2025, the U.S. Department of Labor (“DOL” or the “Department”) issued Field Assistance Bulletin No. 2025-3, in which it prohibits Wage and Hour Division (“WHD”) field staff from seeking liquidated damages in pre-litigation settlements of Fair Labor Standards Act (“FLSA”) claims.

Under the FLSA, non-exempt employees—meaning those who are not paid a sufficiently high salary and/or do not perform exempt administrative, professional, executive, outside sales, or certain computer-related functions—must be paid minimum wage and one-and-one-half times their regular rate of pay for hours worked in excess of 40 hours in a workweek. Employees who contend their employer failed to comply with these obligations may file a lawsuit in court or bring administrative wage claims before the DOL. Under the FLSA, employees who were unlawfully underpaid minimum wage, overtime compensation, or both, may be awarded not only their underpaid wages but also an additional amount equal to the underpayment as liquidated damages.

The DOL’s instruction to WHD field staff not to seek liquidated damages in prelitigation settlements of FLSA wage claims reflects its interpretation that the FLSA only permits the award of liquidated damages in judicial proceedings, not in pre-litigation settlements supervised by the administrative agency. As Acting Administrator Donald M. Harrison stated in the Bulletin:

The Department further recognizes this limitation based on a fundamental principle of administrative law: a federal agency may act only when Congress has clearly granted it the authority to do so. Congress has not clearly granted the Department the authority to supervise the payment of liquidated damages in administrative matters. Any attempt to do so exceeds the Department’s authority.

Prior to June 23, 2020, the DOL’s policy was to seek liquidated damages in pre-litigation settlements of administrative changes only in certain cases, upon agreement by the Solicitor’s Office. As we reported in a previous blog post, the DOL announced in a June 2020 memorandum that it would no longer automatically pursue pre-litigation liquidated damages in administrative actions. In 2021, under a new presidential administration, the DOL reversed course in Field Assistance Bulletin No. 2021-2, which directed WHD field staff to pursue liquidated damages in settlements with employers where the DOL’s pre-litigation investigation confirmed that employers were owed unpaid wages.

Although the recent Field Assistance Bulletin removes from regional WHD staff the discretion to pursue liquidated damages as part of pre-litigation settlements, the DOL nonetheless retains the authority to pursue liquidated damages in DOL-initiated lawsuits if pre-litigation settlement efforts are unsuccessful, a factor that employers are advised to consider when negotiating with the agency.