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Second Circuit Holds that There Can Be No “Double Recovery” of Liquidated Damages Under Federal and New York Wage and Hour Laws.

In its April 6, 2018 decision in Rana v. Islam,[1] the Second Circuit resolved a long standing split among the District Courts of New York on the question of “double recovery” of liquidated damages under the federal Fair Labor Standards Act (“FLSA,” 29 U.S.C. §201, et seq.) and New York Labor Law (sometimes referred to in Rana as “NYLL”). Under both federal and state wage and hour laws, in addition to the full amount of any underpayment of wages to which the employee is otherwise entitled, liquidated damages are available in an amount up to 100% of the unpaid wages.[2] In its per curiam opinion, the Court of Appeals held such liquidated damages cannot be awarded for the same course of conduct under both federal and state wage and hour laws, which would result in a double recovery of liquidated damages.[3]

In rendering its decision, the Court considered that the New York State Legislature amended the Labor Law’s liquidated damages provision twice since 2009, making it easier to recover such damages.[4] These changes each brought the Labor Law’s liquidated damages provision closer in line with the FLSA, raising the amount of such damages from 25% of the unpaid wage to 100% and shifting the burden to the employer to establish a good-faith defense.[5] After these changes were adopted, the federal and state laws still differed slightly, such as with respect to establishing an affirmative defense to the award of liquidated damages.[6] The Court noted however that, “[w]hile the wording of the FLSA and NYLL liquidated damages provisions are not identical, there are no meaningful differences” and “[d]ouble recovery is generally disfavored.”[7] In holding that double recovery of liquidated damages was not permitted, the Court reasoned that “if the New York State Legislature intended to provide multiple recoveries, it would have done so expressly.”[8]

[1] Rana v. Islam, 887 F.3d 118 (2d Cir. 2018).

[2] 29 U.S.C. § 216(b) and N.Y. Lab. L. § 198(1-a).

[3] Rana, 887 F.3d at 123.

[4] Id. at 122.

[5] Id. at 122-23.

[6] Contrast 29 U.S.C. § 260 of the FLSA: “if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that [it] had reasonable grounds for believing that [its] act or omission was not a violation of the [FLSA], the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in section 16 of [the FLSA]” with  N.Y. Labor Law § 198(1-a): liquidated damages are to be awarded “unless the employer proves a good faith basis for believing that its underpayment of wages was in compliance with the law.”

[7] Rana, 887 F.3d at 123.

[8] Id.