On December 7, 2016, the U.S. Court of Appeals for the Second Circuit resolved a split among district courts within the circuit regarding whether liquidated damages may be awarded under both the Fair Labor Standards Act (“FLSA”) and New York Labor Law (“NYLL”) for the same violation(s).
Background
The FLSA allows for liquidated damages equal to 100 percent of unpaid wages as compensatory damages, unless the employer demonstrates that the violation was in good faith and that it had reasonable grounds for believing that its failure to pay was lawful. The NYLL allows for liquidated damages equal to 100 percent of unpaid wages as a punitive measure, unless the employer proves a good-faith basis for believing that its underpayment of wages was lawful.
Many courts in the Second Circuit have granted successful plaintiffs cumulative liquidated damages because they serve different purposes, i.e., compensatory under the FLSA and punitive under the NYLL. This practice was recognized by courts as the “different purposes” rationale.[1] However, other courts in the Second Circuit have refused to award double liquidated damages.[2]
The Decision
In Chowdhury v. Hamza Express Food Corp, et al., No 15-3142-cv, 2016 WL 7131854 (2d Cir. Dec. 7, 2016), the Second Circuit affirmed the lower court’s decision denying the award of cumulative liquidated damages. In Chowdhury, the plaintiff, a deli employee, alleged wage and hour claims pursuant to the FLSA and NYLL. The plaintiff was ultimately successful via a default judgment and subsequently awarded approximately $20,000 by Magistrate Judge Roanne Mann. Noting a split among district courts as to whether cumulative liquidated damages awards are permissible, Magistrate Judge Mann denied the cumulative damages award, concluding that it would constitute an impermissible double recovery. Magistrate Judge Mann’s recommendation was subsequently adopted in full by federal District Court Judge Jack Weinstein.
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