Perry v. City of New York

Background

The plaintiffs were 2,519 current or former emergency medical technicians, paramedics, and fire safety inspectors below the rank of lieutenant in the New York City Fire Department. They sued the City of New York and the Fire Department under the Fair Labor Standards Act, a federal law governing minimum wages and overtime pay, seeking compensation for unpaid work performed before and after their compensated shifts. Twenty-seven fire protection inspector plaintiffs settled and did not proceed to trial.

After a three-week trial, an eight-member jury unanimously found that the defendants violated the Fair Labor Standards Act by failing to compensate the plaintiffs for the pre-shift and post-shift work. The jury also found that the violations were willful. Under the legal standard used at trial, a willful violation meant that the employer knew, or recklessly disregarded whether, its conduct was prohibited by the Act.

The parties later agreed that the total backpay damages owed to the trial plaintiffs were $7,238,513. They could not agree whether the plaintiffs were also entitled to liquidated damages—an additional amount equal to the unpaid wages. The plaintiffs moved for entry of final judgment seeking both $7,238,513 in backpay and an equal amount in liquidated damages. The defendants argued that the decision whether to award liquidated damages remained within the court’s discretion.

Legal framework

The Fair Labor Standards Act generally requires an employer that violates the overtime provisions to pay the unpaid overtime plus an equal amount as liquidated damages. Under the statute, a court may deny or reduce liquidated damages if the employer proves both subjective good faith and objectively reasonable grounds for believing that its conduct complied with the law. The court explained that proving good faith requires the employer to show that it took active steps to learn the Act’s requirements and comply with them.

The court also explained that willfulness extends the usual two-year period for recovering unpaid overtime to three years. Willfulness and good faith involve overlapping factual issues because an employer that knowingly or recklessly disregarded the Act generally cannot also show that it actively and reasonably tried to comply with it.

Court’s analysis

Judge Broderick concluded that the jury’s finding of willfulness prevented the court from finding that the defendants acted in good faith. The judge relied on the Second Circuit’s decision in Pollis v. New School for Social Research and decisions from other courts holding that a jury’s willfulness finding forecloses denying liquidated damages under the good-faith exception. The judge also reasoned that reaching a contrary conclusion could improperly disregard the jury’s factual finding and undermine the parties’ right to a jury trial.

The court rejected the defendants’ arguments, including reliance on an older decision applying a broader definition of willfulness. Judge Broderick explained that the governing willfulness standard requires knowledge or reckless disregard of the Act’s requirements, which overlaps with and is inconsistent with a finding of good faith.

Disposition

The court granted the plaintiffs’ motion for entry of final judgment. The ruling required liquidated damages equal to the agreed $7,238,513 in backpay because the jury found a willful violation. The court ordered the parties, within thirty days, to submit a joint letter addressing attorney’s fees and costs under the Fair Labor Standards Act, including whether they had resolved that issue or needed a briefing schedule. The court expressly stated that it would refrain from ordering entry of final judgment until the attorney’s-fees-and-costs issue was resolved, and it also postponed a settlement-approval conference concerning the fire inspectors’ settlement.