Compensation, Employment Law

$608 in Unpaid Overtime Cost Texas Employer $41,333 in Attorneys’ Fees

By the way, the amount of attorneys’ fees in the headline is not the amount the employer paid its lawyers. Oh, no—that’s the amount it had to pay the employee’s lawyers for suing to recover the $608 in unpaid overtime. To make the disparity even stranger, the employee lost two of his three claims at trial. Read on to solve this riddle.

Source: alfexe / iStock / Getty

Two Out of Three Ain’t Bad

“Angelo” sued his employer, Precision Demolition, for three claims under the Fair Labor Standards Act (FLSA): (1) nonpayment of overtime, (2) retaliation for protesting the nonpayment, and (3) nonpayment of travel time in performing his job duties.

When all was said and done, he ended up with only $608.05 in lost overtime for the third claim (which was doubled as a penalty under the FLSA). He lost his other two claims. OK, sounds fine. The employer isn’t out for much other than its own attorneys’ fees, or is it?

Employer Required to Pay Angelo’s Attorneys’ Fees

Wait! Angelo lost two of his three claims, and he ended up with a whopping total of $1,216.10. What gives? Well, under the FLSA, if the employee is the prevailing party, then the employer is on the hook for his attorneys’ fees.

What is a prevailing party? According to the court in this case, “A plaintiff’s success need not address the central claim of the case; prevailing-party status is appropriate where the plaintiff succeeds on any significant issue in litigation which achieves some of the benefit [he] sought in bringing suit.” So $1,216.10 was enough under the definition.

Is There No Justice?

Sounds unfair, I know. But the law did allow the court some leeway. Here is the court:

[Precision Demolition] correctly [observes] that fees should not overwhelm a case. In FLSA cases, . . . the amount of damages is often less than the fees awarded. Indeed, in recent years this court has seen a spate of FLSA cases brought by low-wage workers seeking paltry sums. The proper measure is not proportionality.

What could the court do? It could reduce the amount of attorneys’ fees awarded based on the employee’s success, but it could not zero out the employee if he was the prevailing party. So, using a sense of rough justice, the court rejected the amount requested by Angelo ($141,236.50) and sliced it down to $41,333.70. Sure, that’s a lot less, but it was still a pretty good payday for Angelo’s lawyers. Castro v. Precision Demolition LLC et al. (N.D. Tex. 2017).

Bottom Line

The FLSA was enacted in 1938. It was designed to aid employees in recovering overtime, and part of the design was the prevailing-party idea. But courts possess broad discretion in determining the amount of the slice. Another judge could have come to a different conclusion.

Is there another way to cut off liability for a whopping attorneys’ fees award? Yes, in federal court, you can essentially surrender and tell the employee that you will pay him what he is owed plus any attorneys’ fees incurred to date.

If the employee rejects the offer and gets less than the amount he was offered, attorneys’ fees from the date of the rejection forward go “poof” and evaporate, even if he ends up being the prevailing party. That is called an offer of judgment. In any event, be careful with FLSA lawsuits. Remember that like the iceberg that sank the Titanic, the biggest danger is often below the surface.

Michael P. Maslanka is an editor of Texas Employment Law Letter and can be reached at Michael.Maslanka@FisherBroyles.com.