Victory For NY Employers – Wage And Hour Plaintiffs Can No Longer “Stack” Liquidated Damages Under Both FLSA And NYLL

New York employers should be happy to hear that after years of uncertainty and courts being split on the issue, the Second Circuit Court of Appeals has concluded that plaintiffs bringing claims for unpaid wages may not recover liquidated damages under both the New York Labor Law (“NYLL”) and the federal Fair Labor Standards Act (“FLSA”). See Chowdhury v. Hamza Express Food Corp., et al., No. 15-3142 (2d Cir. Dec. 7, 2016).

The FLSA and the NYLL both provide that successful plaintiffs can recover the wages owed to them plus liquidated damages in an amount equal to the wages due, unless the employer proves that it had a good faith basis to believe that its underpayment of wages was in compliance with the law. Because the FLSA and NYLL are silent as to whether a plaintiff receiving liquidated damages under one law may also receive liquidated damages under the other law, plaintiffs often claim that they are entitled to liquidated damages under both statutes – a concept known as “stacked” damages. In other words, plaintiffs would demand payment of: (1) the unpaid wages; (2) liquidated damages under the FLSA in an amount equal to the unpaid wages; and (3) liquidated damages under the NYLL in an amount equal to the unpaid wages. This would result in plaintiffs receiving an award that is triple the amount of the unpaid wages.

In recent years, although courts acknowledged that the trend in New York was moving towards not permitting stacked damages, the law was unclear and the courts in the Second Circuit remained split. However, in its December 7, 2016 opinion in the Chowdhury case, the Second Circuit affirmatively stated that because “the NYLL and FLSA liquidated damages provisions are identical in all material respects, serve the same functions, and redress the same injuries,” plaintiffs may not recover “stacked” damages under both the FLSA and the NYLL.

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