In any legal or administrative dispute, one of the most consequential decisions you must make is whether to settle with the other side or to litigate the dispute all the way to a judgment by a jury or judge. With each option comes particular potential benefits and drawbacks, which is why skilled legal representation matters so much. In your Fair Labor Standards Act case, a knowledgeable Atlanta wage and hour lawyer can be instrumental in identifying all of your possible upsides and risks and make a recommendation about the option that will best meet your needs.
In the context of civil lawsuits, one of the key benefits of settling early is the reduction of overall costs.
These calculations also play a role if your business is facing an investigation by the Labor Department’s Wage and Hour Division. In a new internal guidance bulletin, the division has announced that it will no longer seek liquidated damages in pre-litigation investigations.
To understand why this is so important, it pays to know how liquidated damages are calculated. In FLSA cases, liquidated damages typically equal the amount of wrongfully unpaid wages or overtime compensation, which effectively amounts to double damages. The division’s new bulletin declares that Congress only authorized the award of liquidated damages in judicial proceedings, not administrative investigations.
What this means in practice is that employers may now elect to respond to a WHD investigation by correcting their errors through a voluntary payment of the wages and overtime compensation owed without having to pay double the amount owed. Employers should take note that the new bulletin applies only to pre-litigation matters. Nothing in the latest bulletin impedes, in any way, the division’s powers to seek and collect liquidated damages in a dispute that is in litigation.
A Return to the Historical Practice
The new bulletin returns the status of the division’s collection of liquidated damages to its historical standard. For most of its existence, the division only sought and collected liquidated damages in matters resolved through the litigation process (either by settlement or judgment). For matters resolved pre-litigation, the employer was not liable for liquidated damages. That changed in 2010, when the WHD, under President Obama, began seeking liquidated damages in pre-litigation investigations. The division reversed course under President Trump in 2020, then returned to seeking liquidated damages in 2021 under President Biden. The division’s new bulletin returns the pursuit of liquidated damages to its pre-2010 policy.
The policy took effect late last month, meaning that employers once again have a distinct interest in resolving FLSA issues with the division before a regional solicitor files a lawsuit. As soon as a lawsuit is filed, the employer faces the prospect of paying liquidated damages.
This bulletin highlights two key points. One benefit is that, as an employer, resolving your FLSA dispute early may avoid potential double damages. Another is that changes in the White House often lead to changes in the way federal agencies enforce laws, such as the FLSA.
Whether you are facing a dispute and weighing resolution options, or your business needs to ensure it is acting in accordance with the latest changes to the law and agency practices, rely on the experienced Atlanta wage and hour attorneys at Parks, Chesin & Walbert. Our team has the extensive experience and up-to-date knowledge you need to fully protect your interests. Contact us through this website or at 404-873-8048 to schedule a consultation today.