And Now for the Damages That the U.S. Government Will Likely Pay for the Shutdown

The fiasco of the government shutdown offers a stark—and basic—lesson for employers under the Fair Labor Standards Act (FLSA). 

You know that law as the minimum wage law. It also regulates overtime, and categorizes work into “exempt” (salaried) and “non-exempt” (hourly wages) group.

Unions have filed FLSA claims. They will likely win more than Congress will appropriate in a spending bill.

Here is why.

First, the federal government is an employer under FLSA— no less than my friends who have incorporated as dentists, lawyers, investment professionals, accountants, construction firms, etc.-- and who have one or more employees.

FLSA requires timely payment for work. That didn’t happen.

Many people think that when employees aren’t paid on time, the workers are entitled to “back pay.”

True—but they are often entitled to damages that essentially double the amount owed.

Why is that?

It’s to deter deadbeat employers from doing exactly what the United States has done to 800,000 workers— receive work but delay pay indefinitely. If the law only provided back wages, dead-beats would be incentivized to skip paying their workers.

Here is what a “Fact Sheet” says from the U.S. Department of Labor:

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Q. What are liquidated damages?

A. The FLSA provides that a successful employee is usually entitled to double the amount of unpaid back wages, called "liquidated damages." Essentially, liquidated damages are in lieu of interest. An employer can avoid paying liquidated damages only if it shows that it acted in good faith in failing to pay for off the clock work, and that it had a reasonable basis to believe that it need not pay for off the clock work. "Good faith" has a special meaning under the FLSA, and requires that employers have made specific investigation of the application of the FLSA to particular types of employees. Liquidated damages are the rule, not the exception. Employees are normally entitled to liquidated damages.

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To read the complaint by one of the unions, see https://www.afge.org/contentassets/bebfaea72bd2437fa071f5379f98261f/shutdown-december-2018-complaint---final.pdf.

The U.S. Government was ordered to pay liquidated damages for the last shutdown in Martin v. United States, 130 Fed. Cl. 578 (Feb. 13, 2017), https://www.courtlistener.com/pdf/2017/10/27/marrs_v._united_states.pdf 

PS: Who will pay liquidated damages? You and I, in our taxes.