It wasn’t that long ago when, in October 2013, Congress failed to pass a budget and the federal government shut down. As evidenced by a recent opinion from the U.S. Court of Federal Claims, the impact of the shutdown is not quite over. Martin v. United States, No. 13-834C (Fed. Cl. July 31, 2014).
A week after the shutdown ended, a group of federal government employees filed suit alleging violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201-219. Last week, a federal court denied the government’s motion to dismiss as to the FLSA violations. The initial plaintiffs include employees working for the Bureau of Prisons who worked during the shutdown, but were not timely paid minimum wages and overtime on their regularly scheduled paydays.
During the shutdown, the feds classified employees as “excepted” or “non-excepted.” Excepted employees worked during the shutdown but were not paid until the government re-opened; they were not paid for work performed during the shutdown until their next scheduled payday. Because of the shutdown, employees were paid only for work performed through Monday, September 30, 2013 (the day before the government ran out of money). Employees were not paid for work performed during the first week of October until roughly two weeks after their scheduled paydays (after the impasse was resolved and Congress allocated funds).
The plaintiffs argued that the government’s failure to make timely payments violated the FLSA because they received less than the minimum wage and were not paid overtime compensation as required by law. The plaintiffs included a third claim that was dismissed for unrelated reasons.
The government, in moving to dismiss, argued that the FLSA does not apply to situations where the payment of wages “was delayed only a short time.”
The FLSA requires that employees be paid at least the minimum wage and also mandates payment of overtime compensation when an employee works more than 40 hours in a workweek. The Court rejected the government’s argument that that the delay in payments was too short to amount to a violation of the FLSA. Relying on a 1945 Supreme Court decision, Brooklyn Savings Bank v. O’Neil, 324 U.S. 697, the Court noted that the FLSA requires wages to be paid “on time” and when an employer fails to pay workers on their regular paydays, a violation of the FLSA occurs on that date. The Court also cited favorably to the Ninth Circuit’s opinion in Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993), to conclude that, “an FLSA claim accrues when an employee is not paid on a regularly scheduled payday, the FLSA violation also must occur on that day. . . . To hold otherwise would create sufficient uncertainty as to when a violation occurs, and statutory enforcement would prove unworkable.”
The Court concluded, “It is the view of the court that the government’s payment to employees two weeks later than the Scheduled Paydays for work performed during the October 2013 budget impasse constituted an FLSA violation.”
Even though the Court found a violation, the government may not be liable for liquidated damages if it can show that the failure to pay was in good faith and that there were reasonable grounds for believing the failure “was not a violation of the [FLSA].” While the opinion raises the specter that the government will have to pay damages to the prison workers (and other federal workers who join the lawsuit), the decision on the merits will wait for another day.