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eLABORate: Liquidated Damages for FLSA Retaliation Claims: Appropriate or Not?

February 18, 2013

In Moore v. Appliance Direct, Inc. (11th Cir., No. 11-15227, 2/13/13), the Eleventh Circuit held that an award of liquidated damages for a retaliation claim under the Fair Labor Standards Act ("FLSA") is discretionary, not mandatory. In March 2008, plaintiffs, delivery truck drivers, filed suit against their employer, Appliance Direct, Inc., and its Chief Executive Officer, Sei Pak, alleging violations of the overtime provisions of the FLSA. Prior to and during the pendency of the overtime lawsuit, Appliance Direct began changing the employment status of its delivery drivers from employees to independent contractors. Although other delivery drivers formerly employed by Appliance Direct received offers to become independent contractors, those delivery drivers involved in the overtime lawsuit did not receive offers and their employment was terminated. As a result, plaintiffs filed a second action alleging that Appliance Direct and Pak violated the anti-retaliation provision of the FLSA by retaliating against them for filing the overtime lawsuit.

The overtime lawsuit was subsequently settled. A jury awarded plaintiffs $30,000 each in economic damages in their retaliation case, after which plaintiffs filed a post-trial motion for liquidated damages. In support of their motion, plaintiffs contended that section 216(b) of the FLSA, which governs damages, provided for a mandatory award of liquidated damages against an employer who violates the anti-retaliation provision of the FLSA unless the employer demonstrates that he was acting in good faith and had reasonable grounds for believing that his actions were not in violation of the FLSA. The district court rejected plaintiffs' argument in this regard, concluding that the plain language of the FLSA states that an award of liquidated damages in a retaliation case is discretionary, rather than mandatory. The district court then denied plaintiffs' request for liquidated damages, concluding that the economic damages awarded by the jury appropriately effectuated the purposes of the anti-retaliation provision, and thus, no award of liquidated damages was necessary.

In affirming the district court's decision, the Eleventh Circuit reasoned that, although the first sentence of section 216(b) presumes that liquidated damages will be awarded for minimum wage and overtime violations, the second sentence makes liquidated damages for retaliation claims discretionary with the district court. In particular, the second sentence states that an employer who engages in unlawful retaliation "shall be liable for such legal or equitable relief as may be appropriate to effectuate the purposes" of the FLSA's anti-retaliation provision, "including without limitation employment, reinstatement, promotion, and the payment of wages lost and an additional equal amount as liquidated damages." According to the Eleventh Circuit, the second sentence was "clearly for the purpose of allowing separate and more extensive relief to an employee in case[s] of retaliation," and "it is just as clear that the extent of that separate relief is discretionary, requiring a finding that any such relief . . . is appropriate to effectuate the purposes of the retaliation section of the law."

The Eleventh Circuit's decision is in line with the prior holdings of the Sixth and Eighth Circuits, which have directly dealt with the question of whether liquidated damages are mandatory in retaliation cases and answered such question in the negative. See Braswell v. City of El Dorado, Ark., 187 F.3d 954, 958-59 (8th Cir. 1999) (holding that language in the second sentence of section 216(b) gives discretion to the district court to choose the remedy that the court deems appropriate in the case, and that includes discretion to award liquidated damages); Blanton v. City of Murfreesboro, 856 F.2d 731, 737 (6th Cir. 1988) (determining that district court erred in awarded liquidating damages in a retaliation case when such an award would not "effectuate the purposes of [the retaliation provision]"). However, the Eleventh Circuit's decision represents a departure from the decision of the Fifth Circuit in Lowe v. Southmark Corp., 998 F.2d 335 (5th Cir. 1993), which held that liquidated damages were mandatory in connection with an award of backpay and retaliation damages under section 216(b), except where the employer proves that he was acting in good faith and had reasonable grounds for believing that his actions were not in violation of the FLSA. Unlike the decisions of the Sixth and Eighth Circuits, which analyzed the statute and the "as may be appropriate" language in the second sentence of section 216(b), the Fifth Circuit failed to recognize the differing language in the first and second sentences and made no mention whatsoever of the "as may be appropriate" language. Thus, the Eleventh Circuit did not find Lowe to be "persuasive." In light of Lowe, it is uncertain whether, when faced directly with the issue of the differing language in section 216(b), the Fifth Circuit will join the Sixth, Eighth and Eleventh Circuits and find that liquidated damages are discretionary in FMLA retaliation cases.

Moore is a small win for employers facing FLSA retaliation claims, at least in the Eleventh Circuit. While the Eleventh Circuit did not provide guidance regarding when it may be "appropriate" to award liquidated damages in a FLSA retaliation case, there was evidence in Moore that Pak directed that plaintiffs not be given subcontracts for delivery services, and the Eleventh Circuit still found that the district court did not abuse its discretion in determining that liquidated damages would not be appropriate under the facts of the case. It is safe to say that, at the very least, if an employer has a reasonable, non-retaliatory explanation for the complained of action, it may be able to avoid liquidated damages.