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Court: Late Payments to Government Shutdown Workers Violated the Fair Labor Standards Act

In 2013, following rancorous disputes between the Obama Administration and congressional Republicans, the federal government partially shut down from October 1 through October 16. Note the word "partially" - since a total shutdown would have resulted in unprecedented chaos, federal employees were divided into two groups. "Non-excepted" employees performed supposedly non-essential government functions, and were told to stay home during the shutdown. "Excepted" employees - prison guards, border agents, and various other groups employed in safety and protective functions - still had to work. Unfortunately for those employees, it was unclear at the time when, exactly, they would be paid for this work.

It was this confluence of facts, which led to Martin et al. v. United States. At issue: if an excepted employee was paid, on their regular payday, only for the hours worked pre-shutdown, and not then compensated for the additional work performed during the shutdown, has the federal government violated the Fair Labor Standards Act (FLSA)? Let's take a brief example to show how this violation was alleged to have occurred. Let's say you're a federal employee. Your pay period consisted of two weeks, three days of which occurred pre-shutdown, and the remaining seven workdays occurring during the shutdown. When payday comes around, you receive a check for only those three pre-shutdown days. But you worked eighty hours total during those two weeks, and the amount of pay you received, divided up over the course of 80 hours, works out to less than the minimum wage. The plaintiffs in Martin now claim that this refusal to timely pay the minimum wage constitutes an FLSA violation.

The United States Court of Federal Claims, which handles monetary claims against the federal government, has issued a preliminary decision largely, though not entirely, agreeing with the Martin plaintiffs, "excepted" federal prison workers. The case largely comes down to this issue: is a late payment of wage sufficient to establish an FLSA minimum and overtime wage violation? It is undisputed that the federal workers were eventually paid for their labor. The federal government, defendant in Martin, argued that the Court should look to the "totality of the circumstances" in why these payments were late, essentially claiming that no FLSA violation should be found given the unique circumstances of a government shutdown resulting in late payment. The plaintiffs, conversely, argued that courts consistently apply one "usual rule" in determining FLSA violations: they occur when on the exact date an employee is supposed to be paid in full, and is not (in legal terms, this is the time when the claim "accrues"). The Court agreed with the plaintiffs.

No employment law case is complete without the defendant making at least one offensive claim against plaintiffs, and the federal government did not disappoint here. As the court notes and succinctly dismisses, the government claims that any financial harm suffered by plaintiffs, who after all, were denied their full wages on time while their bills and mortgages continued to come due, was due not to said late payments but their own "financial mismanagement."

The case now moves to the discovery phase, where the parties will be able to present evidence for and against their respective factual allegations. The primary issue will be whether the plaintiffs are entitled to what are called "liquidated damages" - monetary damages put in place by statute. Here, those liquidated damages would be the equivalent of the late-paid wages. The government may not be liable for these damages - as the court notes, they have the burden of showing they paid the wages late "in good faith" and without knowing they were violating the FLSA. Regardless, the Court has settled one legal question of relevance to all workers covered under the FLSA: late payments of wages can be against the law.

To read more about the FLS A on the Serrins Fisher employment law blog, click here.

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