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The 2nd U.S. Circuit Court of Appeals has held that an employee cannot obtain a double recovery of liquidated damages under both the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL), resolving an unsettled question of law due to a split among the New York district courts as to whether such cumulative or "stacked" liquidated damages awards are available.
Muhammed Chowdhury sued his employer, Hamza Express Food Corp., for failing to pay overtime wages under the FLSA and the NYLL. Chowdhury also sought liquidated (double) damages under both laws, as well as attorney fees.
[SHRM members-only toolkit: Calculating Overtime Pay in the United States]
In the district court, Hamza Express refused to meaningfully participate in the litigation, leading the district court to enter a default judgment against the company. The district court awarded Chowdhury a total recovery of $42,998, consisting of $21,499 for unpaid overtime wages and another $21,499 representing liquidated damages.
Chowdhury believed he was entitled to two discrete liquidated damages awards: one under the FLSA (which he received) and another under the NYLL (which was not awarded to him), and he appealed to the 2nd Circuit. The question before the court was whether the plaintiff was entitled to a cumulative recovery of liquidated damages under both statutes or a single recovery under the FLSA.
Under the FLSA, a plaintiff whose wages are not properly paid by the employer may recover the amount of the unpaid wages and an "additional equal amount as liquidated damages." The liquidated damages award can be reduced or eliminated if the employer can demonstrate to the court that the failure to pay "was in good faith."
Recent amendments to the NYLL have prompted confusion as to whether an employee could recover liquidated damages under both the NYLL and the FLSA. In 2009, the state legislature amended the NYLL to provide for a 25 percent liquidated damages award unless the employer could establish good faith. In 2010, to harmonize the NYLL with the FLSA, the state legislature increased the liquidated damages award to 100 percent of the base amount of unpaid wages. However, despite this effort to clarify the NYLL through these amendments, the NYLL does not specifically address whether liquidated damages could be recovered in cases where liquidated damages are also awarded under the FLSA.
The 2nd Circuit's review of the NYLL's legislative history and its consideration of long-standing principles of damages law led to its conclusion that a plaintiff cannot recover liquidated damages under both the FLSA and the NYLL. The legislative history revealed that the NYLL amendments were designed to "conform New York law to" the FLSA and had the legislature intended to allow for an extra, or "cumulative," award of liquidated damages, it "would have done so explicitly."
The court also noted that double recovery of damages for the same injury is disfavored under the law. The 2nd Circuit therefore concluded that the NYLL's provision for liquidated damages was satisfied by a similar award under the FLSA and denied Chowdhury's effort to obtain an additional liquidated damages award under the NYLL.
Chowdhury v. Hamza Express Food Corp., 2nd Cir., 2016 WL 7131854 (Dec. 7, 2016).
Professional Pointer: The threat of a double recovery under the FLSA and its state law counterparts can be a game changer in evaluating potential liability. Employers facing wage claims should conduct an early assessment as to whether cumulative liquidated damages could be available to the employee under their state wage and hour law and plan accordingly.
G. Bryan Adams III is an attorney with Van Hoy, Reutlinger, Adams & Dunn PLLC, the Worklaw® Network member firm in Charlotte, N.C.
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