Second Circuit Revisits Issue of "Double Recovery" in Minimum Wage and Overtime Cases

Overtime and wage hour violations are governed by both federal and state law. This has led to some confusion as to the types of damages an employee can seek against an employer. This past April we discussed a decision by the U.S. Second Circuit Court of Appeals here in New York, Rana v. Islam, which held that an employee could not receive liquidated damages–compensation on top of any back pay owed to the employee–under both the Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL). The Second Circuit said the FLSA, which is the federal statute, barred such double recovery and decided the plaintiffs should receive liquidated damages solely under the NYLL.

Judge Raises Concerns Over Federal Court Interpreting New York State Law

On October 1, the Second Circuit once again considered the issue of double recovery. In this case, a group of plaintiffs sued their former employer, a Manhattan restaurant, alleging they were not paid the minimum wage or overtime during their employment. The case was tried before a federal judge sitting without a jury. The judge ultimately ruled in favor of the plaintiffs but held they “were not entitled to double recover of liquidated damages.” The judge also said that one of the defendants–one of the individual co-owner's of the restaurant's parent company–could not be held personally liable for damages.

The Second Circuit affirmed the trial judge's decision on both of these questions. With respect to the co-owner's liability, the appeals court explained that only an “employer” as defined by the FLSA and NYLL is liable for an overtime and wage hour violation. In this case, an “employer” refers to a person or entity with “control over a company's actual operations in a manner that relates to a plaintiff's employment.” Here, the co-owner did not exercise direct operational control over the plaintiff's pay or working conditions, therefore he was not personally liable for the restaurant's actions.

As to double recovery, the Second Circuit affirmed its prior holding in the Rana case, which states that under the FLSA an employee cannot receive “cumulative” or “duplicative” liquidated damages for a violation also covered by the NYLL.

One of the Second Circuit judges wrote separately to note this decision might lead to future problems regarding the interpretation of the NYLL. Senior Circuit Judge Guido Calabresi noted that neither the present case nor Rana forbids “a state labor law from awarding extra damages if, and only if, federal damages were vacated as a result of the existence of state law damages.” But in Rana, the Court suggested the NYLL also does not permit double recovery. Judge Calabresi noted, however, that this is not a binding interpretation of New York law. If presented with the question in a future case, the New York Court of Appeals may interpret the NYLL differently. Given most cases involving double recovery are heard in federal court, Judge Calabresi said the Court of Appeals might not get such an opportunity unless the Second Circuit were to ask for a binding interpretation.

Contact a New York Overtime and Wage Lawyer Today

If you have not receive the minimum wage or overtime pay, you need to take immediate action. A qualified New York employment attorney can advise you of your rights and what steps to take next. Contact the Law Offices of Nisar Law Group, P.C., to speak with a lawyer today.