Fifth Circuit Expands Availability of FLSA Damages

March 29, 2017 by

The Fifth Circuit, which covers Texas employers, has recently expanded the available damages arising under the Fair Labor Standards Act (“FLSA”). In Pineda v. JTCH Apartments, LLC a case of first impression for the 5th Circuit, the court held that a plaintiff, who brought a retaliation claim in response to actions taken after he filed his FLSA overtime claim, can recover for emotional distress damages. The underlying case involved a maintenance worker who sued for overtime under FLSA for work at an apartment complex. Santiago Pineda filed an FLSA lawsuit to recover overtime for maintenance work he performed for the property owner (JTCH Apartments, LLC) at the apartment complex where he and his wife, Maria Pena lived. In exchange for the work, Pineda claimed he received discounted rent, but was not paid overtime. Three days after Pineda filed his FLSA overtime suit, Pineda and Pena received a notice to vacate their apartment for non-payment of rent equal to the amount of the prior rent discounts. Pineda amended his claims to include a retaliation charge and sought additional emotional distress damages. The District Court refused to instruct the jury on the emotional distress damages on the retaliation claim. The 5th Circuit ruled that this was an error, citing other circuits where emotional distress damages were available in retaliation claims.

While generally considered a more pro-employer circuit, the 5th Circuit agreed that the FLSA language was “expansive” and the clause providing for “such legal and equitable relief as may be appropriate” would, and in fact in this case does, include emotional distress damages for retaliation claims. Pineda also tried to expand the claim to his wife, Maria Pena, by claiming she was in the “zone of interests” as put forth in Thompson v. N. Am. Stainless, LP.Pena (who leased the apartment) joined her husband’s lawsuit and asserted retaliation claims, alleging that the eviction notice and demand for back rent were meant to punish them for the initial overtime suit. With a resounding “no,” the Fifth Circuit quashed that theory, removing any lingering doubt about whether a Thompson-style“zone of interests” test applies under the FLSA in the 5th Circuit, which is one bright point for employers coming out of this case.

Employers are once again reminded that employment law is ever-changing; an employer must remain agile and knowledgeable. Decisions that affect the employment relationship are significant decisions, even in an “at-will” employment state. The 5th Circuit now joins the 1st, 2nd, 6th, 7th and 9th Circuits in allowing emotional distress damages in a FLSA retaliation case. Care and caution should be taken by employers in responding to FLSA claims and FLSA compliance remains a key component to business operations. Plaintiffs (and more importantly Plaintiffs Lawyers) are keen to this distinction as it is another avenue to financial recovery, even when the underlying economic damages from the FLSA claim are limited. The cost to defend these claims will increase as well, as parties will be required to investigate and litigate these fact-intensive damages issues. The number of claims may increase over time as well, since plaintiffs with little or no economic damages now have another reason to pursue their claims.

The moral to the story for employers:

  1. Stay abreast of the law;
  2. Review your policies at least annually; and
  3. Get good counsel when making employment decisions.

Even when you think you know the status, remember Heraclitus’ admonition – “The Only Thing That Is Constant Is Change -”Heraclitus, c.475 BCE.

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