(a) Section 11 of the Portal Act provides that in any action brought under the Fair Labor Standards Act to recover unpaid minimum wages, unpaid overtime, compensation, or liquidated damages, the court may, subject to prescribed conditions, in its sound discretion award no liquidated damages or award any amount of such damages not to exceed the amount specified in section 16 (b) of the Fair Labor Standards Act.
137
137 Section 16(b) of the Fair Labor Standards Act provides that an employer who violates the minimum—wage or overtime provisions of the act shall be liable to the affected employees not only for the amount of the unpaid minimum wages or unpaid overtime compensation, as the case may be, but also for an additional equal amount as liquidated damages. The courts have held that this provision is “not penal in its nature” but rather that such damages “constitute compensation for the retention of a workman's pay” where the required wages are not paid “on time.” Under this provision of the law, the courts have held that the liability of an employer for liquidated damages in an amount equal to his underpayments of required wages become fixed at the time he fails to pay such wages when due, and the courts were given no discretion, prior to the enactment of the Portal-to-Portal Act, to relieve him of any portion of this liability. See Brooklyn Savings Bank v. O'Neil, 324 U.S. 697; Overnight Motor Transp. Co. v. Missel, 316 U.S. 572.
(b) The conditions prescribed as prerequisites to such an exercise of discretion by the court are two: (1) The employers must show to the satisfaction of the court that the act or omission giving rise to such action was in good faith; and (2) he must show also, to the satisfaction of the court, that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act. If these conditions are met by the employer against whom the suit is brought, the court is permitted, but not required, in its sound discretion to reduce or eliminate the liquidated damages which would otherwise be required in any judgment against the employer. This may be done in any action brought under section 16(b) of the Fair Labor Standards Act, regardless of whether the action was instituted prior to or on or after May 14, 1947, and regardless of when the employee activities on which it is based were engaged in. If, however, the employer does not show to the satisfaction of the court that he has met the two conditions mentioned above, the court is given no discretion by the statute, and it continues to be the duty of the court to award liquidated damages.
138
138 See Conference Report, p. 17; remarks of Representative Walter, 93 Cong. Rec. 1496-1497; President's message of May 14, 1947, to the Congress on approval of the Portal Act, 93 Cong. Rec. 5281.
(c) What constitutes good faith on the part of an employer and whether he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act are mixed questions of fact and law, which should be determined by objective tests.
139 Where an employer makes the required showing, it is for the court to determine in its sound discretion what would be just according to the law on the facts shown.
139 Cf. §§ 790.13 to 790.16.
(d) Section 11 of the Portal Act does not change the provisions of section 16(b) of the Fair Labor Standards Act under which attorney's fees and court costs are recoverable when judgment is awarded to the plaintiff.
Notes of Decisions
Danny Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016).
· cites it 2× “To establish its good faith, the City relies exclusively on the deposition testimony of Linda Tang, an employee in its payroll department, who testified about the City’s process for determining whether a particular payment must be included in the regular rate of pay.”
Martin v. United States, 130 Fed. Cl. 578 (Fed. Cl. 2017).
· cites it 2× “” 29 C.F.R. § 790.22 (b). The initial good faith inquiry is subjective in nature and requires an employer to demonstrate “an honest intention to ascertain what the [FLSA] requires and to act in accordance with it.”
Thompson v. Sawyer, 678 F.2d 257 (D.C. Cir. 1982).
· cites it 2× “29 C.F.R. § 790.22 (b) (1980); Laffey, 567 F.”
Bull v. United States, 68 Fed. Cl. 212 (Fed. Cl. 2005).
· cites it 2× “” 29 C.F.R. § 790.22 (b) (2005). 2. Attorneys’ Fees and Costs “[W]here an employee prevails on a FLSA claim, the award of attorneys’ fees under § 216(b) is mandatory.”
Laffey v. Nw. Airlines, Inc., 567 F.2d 429 (D.C. Cir. 1976).
“22 (b) (1975), provides: The conditions prescribed as prerequisites to [the court’s denial of liquidated damages] are two: (1) The employer must show to the satisfaction of the court that the act or omission giving rise to such action was in good faith; and (2) he must show…”
Samuel Calderon v. GEICO Gen. Ins. Co., 809 F.3d 111 (4th Cir. 2015).
““[G]ood faith” and “reasonable grounds” are both measured objectively, see 29 C.F.R. § 790.22 (c), and establishing either element is sufficient to satisfy the statute.”
Maria Mireles, Cross-Appellees v. Frio Foods, Inc., Cross-Appellant, 899 F.2d 1407 (5th Cir. 1990).
“reasonable grounds” (emphasis added)); see also 29 C.F.R. 790.22(b). Because the trial court did not find Frio acted both in “good faith” and “reasonably” in its efforts to comply with the law, it erred in not awarding liquidated damages equal to the full amount of unpaid wages…”
Tacke v. Energy West, Inc., 2010 MT 39 (Mont. 2010).
“To avoid liquidated damages, an employer must first demonstrate that his actions were “in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [FLSA] .”
Reyes v. Texas Ezpawn, L.P., 459 F. Supp. 2d 546 (S.D. Tex. 2006).
· cites it 2× “1296 (1945); 29 C.F.R. § 790.22 (2003 & 2005). Therefore, liqui *564 dated damages are compensatory rather than punitive.”
Block v. City of Los Angeles, 253 F.3d 410 (9th Cir. 2001).
“§ 260 ; 29 C.F.R. § 790.22 (b). The statute thus establishes a test with both subjective and objective components.”
Randolph v. PowerComm Constr., Inc., 309 F.R.D. 349 (D. Maryland 2015).
“1997) (citations and internal quotation marks omitted); see also 29 C.F.R. § 790.22 (a)-(b). “This burden is a difficult one to meet .”
— 29 C.F.R. § 790.22(b) — 1 case
Maria Mireles, Cross-Appellees v. Frio Foods, Inc., Cross-Appellant, 899 F.2d 1407 (5th Cir. 1990).
“reasonable grounds” (emphasis added)); see also 29 C.F.R. 790.22(b). Because the trial court did not find Frio acted both in “good faith” and “reasonably” in its efforts to comply with the law, it erred in not awarding liquidated damages equal to the full amount of unpaid wages…”
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