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July 10, 2018
2nd Circuit Negates Wage & Hour Trifecta for New York Employers
By Angelo D. Catalano, Coughlin & Gerhart, LLP

The U.S. 2nd Circuit Court of Appeals (whose decisions apply to all New York employers) recently settled a split among the U.S. district courts under its jurisdiction and concluded once and for all that cumulative liquidated damages under the New York Labor Law (NYLL) and the federal Fair Labor Standards Act (FLSA) are not permitted. The 2nd Circuit held that because the NYLL doesn't expressly provide for liquidated damages in addition to FLSA liquidated damages, a trial court may not award cumulative liquidated damages for the same conduct that violates both laws.

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Background

Monirul Islam, a Bangladeshi diplomat based in New York City, and his wife, Fahima Tahsina Prova, hired Mashud Parves Rana as a domestic worker. Islam and his wife promised Rana certain wages and good working conditions upon their arrival in New York City. However, they seized his passport and visa and confined him to their apartment when they arrived in New York.

Rana was forced to work in "slave[-]like conditions" from dusk to dawn, was verbally and physically abused, and was not paid for the hours he worked. He eventually escaped, reported his situation to the police, and filed a lawsuit in U.S. district court alleging violations of the NYLL and the FLSA, among other things.

Rana was awarded nearly $1 million in damages, including liquidated damages under both the NYLL and the FLSA. The NYLL liquidated damages amounted to $114,677.64, while the FLSA liquidated damages equaled $66,062. The NYLL damages were significantly higher than the FLSA damages because New York has a higher minimum wage and requires additional premium pay when employees work more than 10 hours in a single day. Islam and Prova appealed the verdict to the 2nd Circuit.

2nd Circuit's Decision

On appeal, the 2nd Circuit was forced to determine whether the NYLL permits the imposition of liquidated damages in addition to any liquidated damages awarded under the FLSA. An employer that commits a "willful" violation of the FLSA will be liable for back pay as well as an equal amount of liquidated damages (i.e., a doubling of the amount owed). While the NYLL was amended in 2009 and 2010 to mirror the FLSA's burden of proof and liquidated damages calculations, the 2nd Circuit noted that both laws were drafted to deter wage and hour violations, and both seek to punish the same conduct. Consequently, the 2nd Circuit held that the NYLL doesn't permit duplicative damages for the same conduct.

Because the liquidated damages awarded for the NYLL claim were based on the higher state minimum wage, the 2nd Circuit threw out the FLSA liquidated damages and let the higher NYLL liquidated damages award stand. This decision comports with and reaffirms the 2nd Circuit's 2016 decision in Chowdhury v. Hamza Express Food Corp. (For more on that case, see "2nd Circuit: no trifecta for NY employee's wage and hour claims" on pg. 1 of our January 2017 issue.) Rana v. Islam, No. 16-3966-CV, 2018 WL 1659667 (2d Cir., Apr. 6, 2018).

Bottom Line

While this is a big win for employers throughout New York because you will no longer need to fear triple damages for common wage and hour violations (and attorneys' fees based on that windfall), it's always safer and far less expensive to be proactive and scrupulous on matters involving payroll. Remember that it's the employer's burden under the NYLL and the FLSA to show that employees were correctly paid for all the hours they worked and all timekeeping records were properly maintained. The prospect of "only" paying double for back wages owed and still paying the employee's attorneys' fees should be plenty of incentive to get it right the first time.

To make matters worse, the NYLL includes onerous provisions and regulations addressing mandatory employee breaks, "spread of hours" (which requires additional pay if the employee works more than 10 hours), on-call pay, and wage notices and statements. New York also has several confusing minimum wage and tip-credit laws based on region and occupation. The best way to stay out of trouble is to use competent payroll professionals and consult with experienced legal counsel when in doubt.

Angelo D. Catalano, an editor of New York Employment Law Letter, can be reached at acatalano@cglawoffices.com or 607-723-9511.

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