Court of Appeals upholds $17 million wage and hour verdict against City of New York

This wage and hour case went to trial, and the 2,500 EMT plaintiffs were awarded over $17 million in damages against New York City, which was not paying them overtime for work performed before and after they took their shifts. The Court of Appeals affirms the judgment and holds for the first time that employers must pay overtime if the employer knows about the overtime work, even if the employee failed to report the work and even if the employer was not aware that the employees were actually receiving overtime pay.

The case is Perry v. City of New York, issued on August 25. Plaintiffs were EMT workers who had to perform various tasks before and after the start of their shifts, such as retrieving and inspecting personal protective equipment, doing the same with their technician's bag, inspecting the EMT vehicle, etc. There were thousands of unpaid hours in this case.

The City wanted the courts to find that, in order to recover overtime pay for this work, the plaintiffs would have to show that (1) the City knew about this work and (2) the City knew the workers would not be paid for it. "In effect, the City argues that it does not have to compensate for required overtime work unless employees report the work and request pay." The Court of Appeals (Jacobs, Lee and Perez) says this is an "appealing proposition," but it also says this is not the law.

The Fair Labor Standards Act says the statute is violated when an employer "does not pay overtime wages for work it 'suffers or permits,' that is, work it requires, knows about, or should have known about." The Court adds that "[w]hether the employer also knows that the employee will not be paid is irrelevant to FLSA liability." While an employer may require employees to report overtime work, and an employee's failure to do so may allow the employer "to disclaim the knowledge that triggers FLSA obligations," "an employer that nonetheless requires, knows about, or should know about work must compensate the worker, regardless of whether pay is requested and regardless of whether the employer knows the worker will not be paid."

Here is why the Court reaches this holding. First, a worker is entitled to overtime pay for certain hours he is “employ[ed],” which the statute defines to mean performing work his employer “suffer[s] or permit[s]” (i.e., requires, knows about, or should know about). To hold that [the statute] is violated only when the employer also knows that the employee will not be paid would add an extra-statutory precondition for liability." Second, "[e]mployees cannot waive the protections of the FLSA." Third, "the City’s rule would collapse the 'significant distinction between ordinary violations and willful violations' of the FLSA." "An employer violates the FLSA willfully when it knows that it is not paying an employee for compensable work; but if an employer is not liable unless it knows that its employees are not being paid (as the City contends), then every violation of § 207 would automatically be willful, notwithstanding Congress’s 'obvious' intent to distinguish between these two kinds of violations."

The Court further finds there was a factual basis for plaintiffs to win this case, noting that verdict challengers face a "heavy burden" to win these appeals. The next question is whether the trial court properly found the violations are willful. A willfulness finding means the statute of limitations is three years, not two years, which brings in more overtime violations and thus makes this case much more lucrative for the plaintiffs. 

There is enough evidence of willfulness as the record shows that the City knew (through the Corporation Counsel's office) that "supervisors have a duty to ensure that employees whom they know to be working overtime receive compensation, even if the employee did not submit an
overtime request." As the record also shows the City knew that some required extra-shift work was not being compensated, and the City did little to fix the problem, as it never got around to adopting a draft order from 2008 "forbidding EMS employees from performing extra-shift work 'unless the work has been approved by a [supervisor] and such time has been accurately recorded on their timesheets.'” Nor did the City ensure that FDNY leadership understood their obligation to provide overtime compensation. For example, "The FDNY’s assistant commissioner for budget and finance did not recall ever being told 'that [the City] must pay for work that it knows or should know is being performed even if there is no overtime request put in for that work.” 

Finally, the City challenges the damages award. That challenge fails, as the Court of Appeals finds that the plaintiffs had no way to prove the exact number of minutes they worked without compensation. While damages cannot be grounded in speculation, the jury may rely on a reasonable approximation under the FLSA. And the record suggests the damages calculation was accurate, as plaintiffs proved for example that it was common for EMT's and paramedics to receive a pre-shift briefing after clocking into work. In sum, the Court says:

“[H]aving received the benefits of” plaintiffs’ required extra-shift work, the City “cannot object to the payment for the work on the most accurate basis possible under the circumstances.”The jury could reasonably conclude that plaintiffs’ damages calculation, given its various limitations, was indeed the “most accurate basis possible under the circumstances” (and certainly that it “showed the amount and extent of that work as a matter of just and reasonable inference”).