CA-2 rules no double liquidated damages for same wage violations under FLSA and NYLL
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Tuesday, April 10, 2018

CA-2 rules no double liquidated damages for same wage violations under FLSA and NYLL

By Marjorie Johnson, J.D.

Because the New York Labor Law (NYLL) does not call for awards of NYLL liquidated damages on top of liquidated damages under the FLSA, district courts may not award cumulative liquidated damages for the same course of conduct under both statutes, the Second Circuit ruled in resolving a split among district courts. Partially vacating an over $9.2 million damages award to a live-in domestic worker from Bangladesh, who was purportedly denied any compensation and subjected to 19 months of “slavery-like conditions” before fleeing his employers’ apartment, the appeals court ordered that he receive the NYLL’s higher amount of liquidated damages, but left the issue of whether that would always be the case for all plaintiffs for another day (Rana v. Islam, April 6, 2018, per curiam).

“Slavery-like conditions.” The plaintiff was employed as a domestic worker for a Bangladeshi diplomat serving as the Consul General of Bangladesh in New York City. He claimed the diplomat and his wife hired him in Bangladesh and promised him good working conditions and a monthly wage of $3,000. However, once he arrived in the U.S., they seized his passport and visa, confined him to their apartment, and subjected him to “slavery-like conditions.”

For instance, they purportedly required him to work from at least 6:30 a.m. to 11:00 p.m., seven days a week, without paying him. The diplomat also hit him once when he asked if he would ever receive his salary and another time when he said did not want to follow him to his next posting in Morocco. The plaintiff also claimed they subjected him to verbal abuse and threats of violence, forced him to sleep on the floor, and fed him only expired or leftover food.

Lawsuit alleges myriad of claims. After about 19 months, he fled the apartment while they were out and filed a police report. He then brought this lawsuit asserting that his employment conditions violated the Trafficking Victims Protection Reauthorization Act (TVPRA), the FLSA, the NYLL, and common law torts. The court denied the defendants’ motion to dismiss, despite the diplomat’s assertion that he never mistreated plaintiff and had relocated to Bangladesh’s Embassy in Morocco.

Double liquidated damages. After the defendants ignored five discovery orders and used other dilatory tactics, the court granted the plaintiff’s motion to strike their answer and enter a default judgment. At the damages inquest, his doctor testified that he had post-traumatic stress disorder, major depressive disorder, panic attacks, and generalized anxiety disorder. His psychologist also testified that he had nightmares about his abuse, dissociative reactions, fear trusting anyone, and a diminished interest in life. The court ultimately awarded him over $9.2 million in damages, which included NYLL liquidated damages of $114,677 and FLSA liquidated damages of $66,062.

Default judgment non-reviewable. At the outset, the Second Circuit held that it lacked jurisdiction to review the merits of the default judgment since the diplomat’s notice of appeal stated only that he appealed from the order that awarded damages in favor of the plaintiff. Since this notice did not permit an inference that he intended to appeal from the underlying default judgment, the court only had jurisdiction to review the damages award.

Calculations were sound. Moreover, the diplomat’s factual challenges to the damages calculation were either entirely unsupported or depended on documents that were outside the record. Thus, the damages calculations were sound since the district court fully examined the record, sua sponte examined the plaintiff under oath, and provided detailed findings supporting its calculations, including finding that the plaintiff suffered a host of psychological harms.

Cumulative liquidated award was error. However, the district court erred by granting liquidated damages awards under both the FLSA and the NYLL. Resolving a split among the district courts, the Second Circuit held that the award was impermissible since cumulative liquidated damages may not be awarded for the same course of conduct under both statutes.

NYLL amendments. Notably, the New York legislature amended the NYLL liquidated damages provision twice since 2009, making it easier for employees to claim such damages. Before the amendments, an employee had to demonstrate the employer’s willful failure to pay wages to be awarded liquidated damages of up to 25 percent of the total wages due. But in 2009, the provision was amended to bring it more closely in line with the FLSA by shifting the burden to the employer to prove “a good faith basis to believe that its underpayment of wages was in compliance with the law” to avoid liquidated damages. In 2010, the provision was amended again to provide liquidated damages equal to 100 percent of the total wages due.

No double recovery. While the FLSA and NYLL liquidated damages provisions are not identical, there were no meaningful differences, and both were designed “to deter wage-and-hour violations in a manner calculated to compensate the party harmed.” Therefore, the Second Circuit interpreted the statues as not allowing duplicative liquidated damages for the same course of conduct. “Double recovery is generally disfavored” and it was clear that the New York legislature “rewrote its liquidated damages provision to cover the same ground as the FLSA.” If it had intended to provide multiple recoveries, it would have expressly done so.

Noting that the diplomat did not argue which award should be vacated—and instead pursued an “all or nothing” position—the appeals court found it most “prudent” to award the plaintiff the larger of the two liquidated damages awards. Accordingly, it vacated the FLSA liquidated damages award of $66,062 in favor of the NYLL award of $144,677. However, it left “for a future case” the issue of whether a plaintiff entitled to liquidated damages in the context of both the NYLL and FLSA should always receive the larger of these damages.

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