The United States Court of Federal Claims Holds That an Employer’s Late Payment of Wages Violates the Fair Labor Standards Act

Yarelyn Mena and Edgar M. Rivera, Esq.

In a 2014 case, Martin v. The United States, the United States Court of Federal Claims held that an employer’s late payment of wages violates the Fair Labor Standards Act (“FLSA”) and may trigger liquidated ”double payment” damages. The case arose out of the 2013 government shutdown (October 1, 2013 to October 16, 2013) which resulted in the untimely payment of wages to government workers.

Towards the end of 2013, Congress failed to issue funds for government workers, forcing the federal government into a partial shutdown. The shutdown took place in the first two weeks of October 2013, in the middle of a pay period, which resulted in plaintiffs unpaid government employees being paid only for work from September 22 to September 30, and not the first five days in October. Two weeks after their scheduled payday the plaintiffs received pay for those five days. They argued that the federal government’s failure to pay them for hours worked resulted in (i) underpayment that constituted a minimum wage violation, (ii) failure to pay non-exempt employees for overtime hours worked, and (iii) failure to pay even exempt employees for overtime hours worked.

The government moved to dismiss the complaint for failure to state a claim, arguing that the plaintiffs could not recover damages under the FLSA for a short delay in payment of wages. It argued that the FLSA was designed to protect those employees who are not paid minimum wage or not paid at all, not employees who were not paid on time. It further argued that the FLSA does not specify when employees must be paid, thus, no violation had occurred due to the governments’ late payment. The court disagreed, reasoning that although the FLSA is not explicit about a scheduled payment, there is a “Congressional recognition” that the failure to pay employees on time is so harmful to the “minimum standard of living necessary for health, efficiency, and general well-being of workers” that the “double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well being.” Employers, however, are not without a defense to the “double payment” penalty; if an employer shows that “the act or omission giving rise to [alleged violation] was in good faith and that [the employer] had reasonable grounds for believing that his act or omission was not a violation of the [FLSA], the court may… award no liquidated damages… .”

Ultimately, the court denied the government’s motion to dismiss for failure to state a claim, holding that late payment violated the FLSA.

It is important for employees to know that their employers are in violation of the FLSA at the time of a missed regular payday. Without good cause on the employer’s part, workers can be entitled to damages for each day thereafter. If your employer has failed to pay you or pay you on time, please contact The Harman Firm, LLP.