Avoiding Double Recovery: Assessing Liquidated Damages in Private Wage and Hour Actions Under the Fair Labor Standards Act and the New York Labor Law

March 1, 2013

Wage and hour cases are common in New York, yet courts calculate damages inconsistently when plaintiffs pursue their unpaid wages under both federal and state law. Overlapping provisions of the Fair Labor Standards Act and the New York Labor Law both authorize private actions for the recovery of certain unpaid wages, and each also provides an additional 100 percent of the unpaid wages as liquidated damages unless the employer establishes a good-faith defense. Given these similarities, New York wage and hour cases regularly flirt with the double recovery doctrine, which prevents plaintiffs from receiving duplicative awards.

Historically, courts in the Second Circuit have been split over whether awarding both sets of liquidated damages offends double recovery. An old New York statute authorized only 25 percent of the unpaid wages as liquidated damages and allowed them only if an employee could demonstrate that the employer’s violation was willful. Based upon the old law’s scienter requirement and upon its legislative history, courts considered the state provision punitive in purpose, as opposed to the federal provision, which is compensatory. Consequently, some courts reasoned that because each provision served a different purpose, the awards were not duplicative. Others disagreed.

Although the New York Labor Law’s current liquidated damages provision bears little resemblance to its predecessor, some courts continue to apply analyses of the old statute to the new one. This Note analyzes the effects that amendments enacted in 2009 and 2010 should have upon the preexisting split and contends that neither the current statutory text nor its legislative history conclusively supports characterizing the state provision exclusively as either compensatory or punitive. Instead, the evidence suggests a dual purpose. Since the awards overlap, courts can only avoid double recovery by awarding one set of liquidated damages.

March 2013

No. 4