The Department of Labor’s Wage and Hour Division (WHD) has announced a significant change in the way it handles liquidated damages under the Fair Labor Standards Act (FLSA). Beginning June 27, 2025, the WHD will rescind its prior guidance and no longer supervise or request the payment of liquidated damages during the administrative investigation or settlement phase of FLSA matters. Instead, liquidated damages will only be sought as part of judicial proceedings—after a formal lawsuit has been filed.

For years, the WHD has sought liquidated damages—additional compensation equal to unpaid minimum wages or overtime—during its investigations and pre-litigation settlements. Following a recent review, the Department determined that the FLSA does not authorize the WHD to supervise or negotiate liquidated damages in any administrative (non-court) context. This means that, going forward, only the courts can award liquidated damages in FLSA matters, and this will happen only if a lawsuit is filed. 

What Does it Mean 

WHD’s authority in administrative settlements is now limited strictly to recovering unpaid minimum wages and overtime on behalf of employees. Any previous guidance permitting WHD to supervise or request liquidated damages before litigation has been officially withdrawn. 

This shift clarifies the scope of WHD’s enforcement powers and ensures that the assessment of liquidated damages will be handled solely by the courts, where employers have the ability to present defenses and receive full due process. Employers should note that, while liquidated damages are off the table in WHD-supervised settlements, they remain a possibility in litigation, where courts may award double damages absent a showing of good faith by the employer. 

Next Steps 

• Review Past and Ongoing Settlements: Employers should promptly review any pending or recent WHD investigations and settlements. Agreements that include liquidated damages and were finalized before June 27, 2025, will generally remain in effect. For all future matters, only back wages will be included in WHD-supervised resolutions. 

• Strengthen FLSA Compliance Efforts: Now more than ever, employers should invest in proactive compliance efforts, such as routine wage audits, prompt correction of violations, and documentation of good faith efforts to comply with wage and hour laws. Demonstrating good faith may help minimize risk in the event of an FLSA lawsuit. 

As always, employers should seek legal advice for specific cases and stay updated on Department of Labor developments.