Wage & Hour Retaliation Suits: Calculating Damages For Employees Making More Money After They Leave

January 15, 2007

Retaliation cases under the Fair Labor Standards Act (FLSA) are similar to retaliation cases in other areas of employment law. Essentially, an employee argues that the employer retaliated against him or her for making a complaint about unpaid wages or overtime. An FLSA retaliation claim generally focuses on the employer’s actions after the company receives notice of the complaint as opposed to whether or not the employer correctly paid the required wages under applicable law.

Recently, the federal appellate court that governs Texas and several other states issued a decision on determining damages for an FLSA retaliation case in the following situation:

Employees Cora Johnson and Delores Seay filed claims for unpaid regular and overtime wages. The company Bayou Home Bureau (Bayou) discharged these employees. These employees sued the employer claiming FLSA retaliation. After the discharge of their employment, both employees secured jobs. At issue was whether their subsequent earnings could offset the amount of damages sought by these two former employees against Bayou.

Traditionally, Courts have offset a Plaintiff’s lost wages with earnings received after the separation from employment. However, the FLSA does not “explicitly address” whether wages earned after the termination of employment offset lost wage damages. Thus, there was a dispute about whether the same procedures should be followed under the FLSA with the former employees arguing there should be no offset.

Ultimately, the Court decided that a wage offset should occur for a FLSA retaliation claim. The Court decided to apply an offset since offsets occur for claims made under the Age Discrimination in Employment Act, which has the same statutory remedies provision as the FLSA. Applying the offset to the case at bar, the Court noted that Ms. Johnson had “suffered no damages” because her post separation earnings offset any potential losses. She was making more money now than before the separation of her employment. As for Ms. Seay, while she was entitled to recover some damages, her damages were also limited as a result of her subsequent earnings.

This decision is good news for employers on several fronts. First, it allows the company to make inroads into the damages calculation on an FLSA retaliation claim if an employee is able to find subsequent employment. Second, the potential wage offset may discourage the filing of FLSA retaliation suits especially where the employee makes more money in another job after the separation from employment.

Nevertheless, avoiding these types of lawsuits in the first place is an even better proactive approach. Examining your company handbook to make sure there is a complaint procedure in place is one step that may help avoid any liability and a lawsuit. Additionally, be sure to have your HR Department timely investigate any complaints about unpaid wages or overtime. In short, avoiding a lawsuit is always the best option, but at least if a suit is filed, the employer may have an additional defensive argument to minimize its exposure in these types of cases.

Johnson v. Martin, 5th Circuit, December 18, 2006.

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