What scares me the most about a USDOL audit or a FLSA lawsuit is the threat of liquidated damages. These damages, which double the wages due, are imposed almost routinely in court cases and are being imposed more and more by the administrative agency.  Well, sometimes the pendulum swings the other way, as illustrated by a recent case.  Although the Sixth Circuit affirmed the fact that the employer did not pay overtime properly, it denied the government’s request for liquidated damages.  The case is entitled Acosta v. Min & Kim, Inc. et al., and issued from the Court of Appeals for the Sixth Circuit.

The workers, sushi chefs and servers, did not receive overtime.  They worked 52 hours every week but received only a set lump sum of money, without regard to the number of hours worked and without any overtime.  With that said, the Court would not award liquidated damages, concluding that the employer acted in “good faith” and was not seeking to evade the law.

The lower court Judge had granted summary judgment for the agency on the overtime liability issue.  The Judge ordered the Company to pay more than $112,000 in back due wages.  The Company appealed but the appellate Court upheld the wage portion of the holding.  The Court found that it did not matter if employees were fairly or even generously paid, an employer was “not free to select which parts of the act with which to comply.”

The Takeaway

Maybe the Court did not award liquidated damages because the workers here were very well compensated, which demonstrated that the Company was not out to nickel and dime its employees.  A showing of good faith is necessary to even think about avoiding liquidated damages but, to me, it is hard to envision how a wholesale failure to pay overtime could be considered “good faith.”

But, with that said, don’t look a gift horse in the mouth…

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