There are a lot of ways that a wage and hour overtime claims under the Fair Labor Standards Act (“FLSA”) to grow horribly out of control. Our wage and hour attorneys have previously addressed how collective actions (joining on many employees into one claim) can result in huge verdicts because employers failed to settle with one complaining former employee, who in turn brought a claim on behalf of all similarly situated employees. Another way is the automatic liquidated damages, attorney fees and costs provisions found at 29 U.S.C. § 216(b), which provides in pertinent part: “Any employer who violates the provisions of section 206 or section 2074 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages . . . . The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid by the defendant, and costs of the action.”
As the Eleventh Circuit Court of Appeals held in Kreager v. Solomon & Flanagan, P.A., “section 216(b) of the [FLSA] makes fee awards mandatory for prevailing plaintiffs.” There is no discretion. Once a law suit is filed, even if the employer offer to settled for the full amount of the owed back overtime pay, the employer would still be subject to paying the employee’s costs and attorney’s fees.
This brings me to this cautionary tale for employers. In Johnson v. Roma II -Waterford LLC, the employee sought approximately $9,000 in back overtime wages. The employer scoffed and paid its attorney well in excess of $9,000 to defend the case all the way through a jury trial, where the jury returned verdict for $3,648. Although this would seem like somewhat of a win for the employer, in that a verdict was returned for less than that sought, it is not in the eyes of the law. It’s much like when the Cleveland Browns cover the spread, but still lose the real game. It is still a loss, moral victory aside.
Following the jury verdict, the employee moved pursuant to 29 U.S.C. § 216(b) for double the verdict in liquidated damages, costs and attorneys fees of $112,000. After the trial court blamed both parties for over litigating, it denied the request for liquidated damages and costs, and reduced the attorney’s fees to $10,000. At this point, the employer is claiming victory and telling the appeals court that this was a good result. Let’s think about this for a second, after likely paying its attorneys somewhere between $80,000 and $100,000 to defend a $9,000 claim, the employer was claiming victory because it only had to pay $13,648 to the other side.
If that was the end of the story, just this would serve as a good reason to engage in early settlement discussions. Heck, settling the case for $15,000 upon notice of the claim would have saved the employer nearly $100,000.
But, it does not end there. The employee appealed. The employer likely ended up spending another $10,000 or so on the appeal; and the court of appeals held that: (1) liquidated damages are required except under limited circumstances; (2) the employer is responsible for the costs; and (3) that the trial court could not without very well reasoned and express analysis reduce the attorney’s fees. With that, the case was sent back to the trial court for more hearings (payments to defense lawyers), and a determination of some middle ground for the attorney’s fees. I’d guess it ends up at somewhere between $40,000 and $60,000. If I’m right, the employer will be out of pocket about $170,000 when all is said and done to defend a $9,000 claim. I suppose that the employer gets the moral victory of the employee only pocketing $7,296 ($1,704 less than claimed). For those deficient at math, that is spending $100 for each $1 saved.
For claims under $50,000, employers should always try to settle quickly before incurred attorney’s fees (on both sides) make it much more difficult. Most employers understand this. This is just a reminder to those who don’t.
If you even think that your employment rights have been violated or that you might need an employment lawyer, then call the right attorney to schedule a free and confidential consultation at 866-797-6040. Spitz, The Employee’s Law Firm is dedicated to protecting employees’ rights and solving employment disputes.
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