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Double Damages for Overtime and Minimum Wage Violations in Connecticut May Soon be Mandatory!

Earlier this week Attorney Daniel Schwartz wrote a blog post titled Proposed Bill Would Double Damages for Overtime Violations.

I disagree with several points made in this post.  The problem isn’t with the law, it’s with the fact that employers continue to misclassify their employees and underpay them.

To begin with, the proposed Connecticut rule mirrors the federal Fair Labor Standards Act.  The FLSA makes double damages the norm and not the exception, as showing that the employer acted in good faith is a difficult hurdle.  The reason for imposing double liquidated damages on employers who misclassify employees is simple- when you aren’t paid the money you should be paid, you suffer financially in ways that are difficult to show with any certainty in a spreadsheet.  You might fall behind in your bills or tax payments and incur penalties.  You might not qualify for a low rate of interest on a loan you need to send your kid to college.  You might forfeit the opportunity to go to college yourself for lack of funds and  lose an opportunity to increase your earning power.  These are the wrongs that the double liquidated damages provision of the FLSA seeks to correct, and why employers are usually required to just pay double damages.

The fact that the FLSA already provides for double liquidated damages means that these lawsuits are already being filed; they’re just being filed in federal court under federal law instead of in our state courts.  For the most part, the FLSA and the Connecticut minimum wage and overtime cases cover the same employees and the same types of claims.  Both laws state that an employer must pay “time and a half” overtime unless the employee falls into certain narrowly construed exemptions, and the exemptions aren’t so different that providing for double damages in the Connecticut law will drive up the number of claims.  That is, there aren’t very many categories of employees that would now be able to file claims under Connecticut law and get double damages that they couldn’t have filed and gotten double damages for under federal law.  (Computer professionals are exempt under federal law but not Connecticut law, but that’s one of the few real differences.)

It is also not the case that plaintiffs’ lawyers would start filing their cases in court to take advantage of other Connecticut provisions not offered by federal law.  Class action jurisprudence in Connecticut is not favorable to employees, as Connecticut judges have certified very few cases as class actions in recent years (though we are working hard to change this pattern).  Further, the statute of limitations under the Fair Labor Standards Act is three years in the case of a willful violation, not two years as it is under Connecticut law.

Finally, it should be noted that the law as it stands now- requiring employees to show that their employer acted wilfully, arbitrarily, or in bad faith in misclassifying them as exempt in order to obtain double damages- is a judicial gloss anyway. This language does not exist in the statute, and should the proposed bill be passed, the legislature would simply be saying something along the lines of, “no, we really meant it.”  (Interestingly, Massachusetts went through a similar process a few years ago, and it imposes triple damages for wage claims!  See www.wlox.com

Mandatory double damages for overtime and minimum wage violations would not have the dire effect on Connecticut employers or courts that Atty. Schwartz predicts.  The law is unlikely to materially increase the number of cases filed under the new law in Connecticut courts.  Rather, this law would bring Connecticut wage and hour law into line with that of our neighbor and the federal law.  The wage laws and remedial in nature, and protect persons with less bargaining power to get the deal that they deserve from their employer.  Employers have a lot to gain by making people work overtime without paying the premium rate (free labor!) and should be faced with the prospect of double damages if they act on this incentive.