Liquidated damages are mandatory in overtime and minimum wage cases.
The FLSA provides that an employer who violates the requirement to pay overtime compensation “shall be liable to the employee or employees affected in the amount of . . . their unpaid overtime compensation . . . and in an additional equal amount as liquidated damages.” 29 U.S.C. § 216(b). Although the language of the overtime statute § 216(b) is mandatory, Congress later gave district courts the sound discretion not to award liquidated damages if the employer shows (1) “that the act or omission giving rise to such action was in good faith” and (2) “that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA].” 29 U.S.C. § 260; Barcellona v. TiffanyEnglish Pub, Inc., 597 F.2d 464, 468 (5th Cir. 1979) (minimum wage case).
Recent trends in mediation of wage and hour cases
It is bewildering when a Defendant attends mediation and starts settlement negotiation from a position that liquidated damages don’t apply and then proceed to discount the actual unpaid back wages.
The reason why this position is unreasonable is that the Fair Labor Standards Act (FLSA) makes liquidated damages mandatory in overtime lawsuit and lawsuits for minimum wage. Unless the employer can prove that their violation of the FLSA was in good faith, liquidated damages in the amount equal to the unpaid overtime or minimum wage is in order. When a defense lawyer start mediation by offering to pay only the unpaid overtime or minimum wage with a discount, they are ignoring a bedrock of overtime and minimum wage law.
The burden on the employer to avoid liquidated damages is high
Liquidated damages (also known as double damages) are the norm in wage and hour cases for overtime and minimum wages. The burden of proving that the two-prong test has been met is upon the employer, 29 U.S.C. § 260 (“if the employer shows to the satisfaction of the Court”); Thomas v. State of Louisiana , 348 F.Supp. 792, 796 (W.D. La.1972), who has “the plain and substantial burden of persuading the court by proof that [its] failure to obey the statute was both in good faith and was predicated upon such reasonable grounds that it would be unfair to impose upon [it] more than a compensatory verdict.” Barcellona , 597 F.2d at 468. The defense requires plain and substantial evidence of at least an honest intention to ascertain what the FLSA requires and to comply with it. Brock v. Wilamowsky , 833 F.2d 11, 19 (2d Cir. 1987) (citing Williams v. Tri-County Growers, Inc., 747 F.2d 121, 129 (3d Cir. 1984)); Barcellona, 597 F.2d at 468-69). “If an employer suspect[s] that [it is] out of compliance with the FLSA, it cannot act in good faith.” Steele v. Leasing Enters., Ltd., 826 F.3d 237, 246 (5th Cir. 2016) (citing Heidtman v. Cnty. of El Paso , 171 F.3d 1038, 1042 (5th Cir. 1999)) (alterations in original). The burden is a difficult one to meet; “double damages are the norm, single damages the exception.” Brock , 833 F.2d at 19 (quoting Walton v. United Consumers Club, Inc. , 786 F.2d 303, 310 (7th Cir. 1986)). Even if the employer carries its burden, the court retains the discretion to award liquidated damages. Hayes v. McIntosh , 604 F. Supp. 10, 21 (N.D. Ind. 1984); Thomas, 348 F. Supp. at 796. At the end of the day, the employer has the burden of proof to explain to the court why the mandatory double damages should not be applied.