Published
July 21, 2025
At the end of June, the Wage and Hour Division (WHD) announced that liquidated damages will no longer be imposed when violations of the Fair Labor Standards Act (FLSA) are discovered. Liquidated damages are double the amount of the back wages that have been determined to be owed.
The Biden administration automatically assessed them as part of the damages calculation. The FLSA, however, states that only courts can assess liquidated damages as they represent an extra level of penalty to be reserved for cases where the employer showed willful or egregious conduct. Not only does the WHD’s new policy put the agency back in compliance with the law, but in addition, by not assessing damages at multiples of the amount owed, employers will be less likely to challenge citations—meaning that employees will receive the compensation they are owed sooner.
On July 14, OSHA announced that it is adjusting the agency’s approach to penalties assessed on small businesses. The new policy, outlined in the Penalties and Debt Collection section of OSHA’s Field Operations Manual, increases penalty reductions for small employers, making it easier for small businesses to invest resources in compliance and hazard abatement. For example, a penalty reduction level of 70%, which was previously only applicable for businesses with 10 or fewer employees, will now be expanded to include businesses with up to 25 employees. The revisions also include new guidelines for a 15% penalty reduction for employers who take steps to address or correct a hazard.
Additionally, the updated policy expands the penalty reduction for employers without a history of serious, willful, repeat, or failure-to-abate OSHA violations. Under the revision, employers who have never been inspected by federal OSHA or an OSHA State Plan, as well as employers who have been inspected in the previous five years and had no serious violations, are eligible for a 20% penalty reduction.
Reducing the penalty for small employers will also decrease the need to challenge citations, thereby expediting the abatement of the hazard and increasing protection for workers. “By lowering penalties on small employers, we are supporting the entrepreneurs that drive our economy and giving them the tools they need to keep our workers safe ... while keeping them accountable,” said Deputy Secretary of Labor Keith Sonderling.
He’s exactly right, and workers and employers can be thankful.
About the author
Marc Freedman
Marc Freedman is vice president of workplace policy at the U.S. Chamber of Commerce. He develops and advocates the Chamber’s response to OSHA matters; FLSA issues such as overtime, minimum wage, and independent contractors; paid leave issues; EEOC, and other labor and workplace issues.
