A recent announcement by the U.S. Department of Labor Wage and Hour Division provides yet another reason workers need to hire their own overtime pay lawyer to represent their best interests and maximize their recovery. Fortunately, workers can hire attorneys on a contingent fee basis (no fee if no recovery) and do not have to rely on the DOL to protect their rights to full damages. 

DOL’s Gift to Cheating Employers – Forget About Double Damages

In a bulletin released on June 24, 2020, the Department of Labor announced that it is abandoning efforts to collect liquidated (double) damages in certain actions against employers for minimum wage and overtime violations. This is a significant departure from current Obama era policy in which the DOL would pursue both back wages owed to employees plus an equal amount as liquidated damages in any pre-litigation settlement with an employer. This change, which was the result of an executive order from President Trump, seriously undermines the incentives for employers to comply with the wage and overtime laws – effectively eliminating the biggest risk and consequence of failing to pay employees the wages they are legally entitled to. 

Double Back Wages is what the Law Says Workers are Entitled To

The Fair Labor Standards Act (“FLSA”) is the federal law that requires employers to pay workers at least time and a half their regular rate for all hours over 40 per week. It also provides the “stick” to incentivize employers to comply with the wage laws. That is, if you get caught shorting workers’ pay, you must pay workers back double the amount owed. 

The law states that an employer who fails to pay a worker their proper minimum wage or overtime “shall be liable” to the employee for the unpaid wages, “and an additional equal amount as liquidated damages.” Otherwise, if all that was risked by cheating employees out of wages was having to ultimately repay only the back wages owed, there is no penalty for violating the law. In fact, there is a perverse incentive to improperly retain workers’ wages as a sort of interest-free loan…that must only be repaid when/if workers pursue a claim. This scenario was never the intent of a law designed to protect workers’ rights to fair pay.   

As of July 2020, the DOL will stop seeking pre-litigation liquidated damages in settlements with employers if any of the following circumstances is present:

  • There is no clear evidence of bad faith and willfulness;
  • The employer’s explanation for the violations show that the violations were the result of a bona fide dispute of unsettled law under the FLSA;
  • The employer has no previous history of violations;
  • The matter involves individual coverage only;
  • The matter involves complex section 13(a)(1) exemptions (applicable to bona fide executive, administrative, professional, and outside sales employees) and 13(b)(1) exemptions (applicable to motor carriers whose qualifications and maximum hours are established by the Secretary of Transportation) ; or
  • The matter involves State and local government agencies or other non-profits.

Under this new scheme, as long as an employer hasn’t been caught shorting wages before, they essentially get a free pass on the backs of, and at the expense of, their employees. If they are lucky, the workers may receive the back overtime pay they are owed, but nothing to compensate them for the months or years they were deprived of the use of this money or the hardships such may have caused.  

What to Do If You Need to Hire Your Own Overtime Pay Lawyer 

If you have questions or believe that you have been the victim of wage theft due to an improper pay scheme, contact us for a free and confidential review of your situation.