By Angelo D. Catalano, Coughlin & Gerhart, LLP
Violations of the Fair Labor Standards Act (FLSA) and New York state's Labor Law subject employers to paying employees back pay plus "liquidated" damages of an equal amount (in addition to reasonable attorneys' fees). Recently, a question arose on whether an employee can "stack" liquidated damages under the FLSA and the Labor Law so that he scores a triple recovery: back pay and liquidated damages under the FLSA plus liquidated damages under the Labor Law.
The U.S. 2nd Circuit Court of Appeals (which covers Connecticut, New York, and Vermont) answered in the negative. Employees may get liquidated damages only once, and they cannot recover cumulative liquidated damages under both federal and state law.
Muhammed Chowdhury sued his employer, Hamza Express Food Corp., for failing to pay him overtime as required by the FLSA and the Labor Law. The U.S. District Court for the Eastern District of New York determined that Hamza failed to pay overtime under both laws and ordered the employer to pay Chowdhury $21,498.75 in back wages and an equal amount in liquidated damages. Chowdhury appealed the decision to the 2nd Circuit, claiming he was entitled to an additional $21,498.75 in liquidated damages under the Labor Law.
Liquidated Damages Under Federal and State Law
Under the FLSA, if an employer fails to properly pay an employee, it is liable for the amount of unpaid wages and an equal amount in liquidated damages. (The amount of liquidated damages can be reduced if the employer proves it acted in good faith and had reasonable grounds to believe it was not violating the FLSA.) In 2015, the Labor Law was amended to mirror the FLSA so that an employee could be awarded liquidated damages in an amount equal to the back pay.
Finding that the Labor Law was meant to mirror the FLSA and redress the same wrong and noting that courts generally do not allow double recovery, the 2nd Circuit determined that an employee who prevails under both the FLSA and the Labor Law cannot stack liquidated damages.
In a "Summary Order," which does not have the precedential value of a decision, the 2nd Circuit affirmed the district court's decision, finding Chowdhury could not "double dip" for a second award of liquidated damages. Chowdhury v. Hamza Express Food Corp. et al., ___ Fed Appx ___ (2d Cir., 2016).
With the possibility of liquidated damages, attorneys' fees, and punitive damages, wage and hour litigation can be exceedingly expensive. While this case clarifies that employers are liable only for back pay and a single award of liquidated damages under the FLSA and the Labor Law, it reaffirms the exposure employers face for not correctly paying employees.
Also, employers are reminded that the election of a new president who may be probusiness will not change New York state's antibusiness "economic justice" enforcement posture under the current governor. Experienced counsel can help you avoid these pitfalls by staying abreast of ever-changing wage and hour laws.
Angelo D. Catalano, an editor of New York Employment Law Letter, can be reached at firstname.lastname@example.org or 607-723-9511.