Amid the uncertainty concerning the DOL's enjoined overtime exemption rules and similar state-led efforts to increase the salary threshold, such as in New York, the Second Circuit recently gave employers an early holiday present when it resolved a long-standing split among New York federal courts and held that "New York's law does not call for an award of New York liquidated damages over and above a like award of FLSA liquidated damages."
Under the FLSA, an employer that underpays an employee is liable in the amount of those unpaid wages "and in an additional equal amount as liquidated damages" if it did not act in good faith. Similarly, under the NYLL, liquidated damages in the amount of 100% total wages due are mandatory unless the employer proves its good faith. The NYLL is silent as to whether it provides for liquidated damages in cases where liquidated damages are also awarded under the FLSA.
In Chowdury v. Hamza Express Food Corp. et al., an employee challenged the damages award he received after his former employer defaulted in his lawsuit for unpaid wages under the FLSA and New York Labor Law. The employee sought two discrete liquidated damages awards: one under the FLSA and one under the NYLL. Noting a split among district courts as to whether such "cumulative" or "stacked" liquidated damages awards are available, the Magistrate Judge recommended denial of a cumulative award, concluding that it would be an unfair double recovery. The District Court adopted the Magistrate Judge's recommended ruling.
The Second Circuit affirmed. It held that "double recovery" of liquidated damages under the FLSA and NYLL was unwarranted. "Had the New York State legislature intended to provide a cumulative liquidated damages award under the NYLL, we think it would have done so explicitly in view of the fact that double recovery is generally disfavored where another source of damages already remedies the same injury for the same purpose." Accordingly, the court held, "In the absence of any indication otherwise, we interpret the New York statute's provision for liquidated damages as satisfied by a similar award of liquidated damages under the federal statute."
The decision is a big win for employers as it resolves what has frequently been a bone of contention between parties litigating (and trying to resolve) wage and hour lawsuit in New York brought under the FLSA and NYLL, and potentially could be used in other states where penalties under wage-and-hour laws serve the same purpose as the FLSA's liquidated damages provision. The potential exposure in New York cases is already high enough to give employers the holiday blahs: back wages, 100% liquidated damages, 9% pre-judgment interest, a 6-year limitations period, and attorneys' fees. This decision at least removes the possibility that plaintiffs will claim, like George Costanza, an entitlement to "double dip."
Happy Holidays!
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