Liquidated Damages are Discretionary in FLSA Retaliation Case; CEO Held Individually Liable


In Moore v. Appliance Direct, Inc.,* the plaintiffs brought retaliation claims under the Fair Labor Standards Act ("FLSA").  Although the plaintiffs won on their retaliation claim, they ultimately did not recover liquidated damages because such damages were deemed discretionary, not presumptive or automatic.

At trial, the plaintiffs won, with the court awarding them $30,000 each. The plaintiffs then asked that the trial court to add liquidated damages, for a total of $60,000 each.  The trial court denied the request and all sides appealed. Without evidence of the employer's good faith, the plaintiffs argued, the trial court was required to award liquidated damages.  The Eleventh Circuit Court of Appeals disagreed.  Even though overtime and minimum wage violations, if proven, require liquidated damages, retaliation claims do not.  Instead, the FLSA provides that certain relief (including liquidated damages) should be imposed "as may be appropriate to effectuate the purposes [of the retaliation provision of the law]."

Three circuits now agree that liquidated damages in an FLSA retaliation claim are discretionary, not mandatory.  One factor to be considered in such cases - whether compensatory damages are enough to deter employers from unlawful activity.

The Court in Appliance Direct also sent a reminder to owners and executives of companies about potential individual liability.  There, the plaintiffs sued the corporate employer's CEO for retaliation -the CEO had allegedly prevented the plaintiffs from getting outside jobs as independent contractors in retaliation for their claims.  The Court ruled the CEO could be held individually liable to the plaintiffs, because (a) he owned 75% of the company, (b) he guided company policy and gave instruction to managers regarding job duties, (c) he negotiated leases and contracts for the company, and (d) he directed the alleged acts of retaliation.

Although company officers and managers cannot be individually liable under many employment laws, the buck might stop with the owner who controls the business in FLSA cases.

* Moore v. Appliance Direct, Inc., No. 11-15227 (11th Cir. Feb. 13, 2013).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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