324 U.S. 697 (1945), 445, Brooklyn Savings Bank v. O'Neil

Docket Nº:No. 445
Citation:324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296
Party Name:Brooklyn Savings Bank v. O'Neil
Case Date:April 09, 1945
Court:United States Supreme Court

Page 697

324 U.S. 697 (1945)

65 S.Ct. 895, 89 L.Ed. 1296

Brooklyn Savings Bank



No. 445

United States Supreme Court

April 9, 1945

Argued February 5, 6, 1945



1. In the absence of a bona fide dispute between the employer and the employee as to liability, an employee's written waiver of his right to liquidated damages under § 16(b) of the Fair Labor Standards Act does not bar a subsequent action by the employee to recover such liquidated damages. P. 707.

2. The legislative policy behind the provision of § 16(b) for liquidated damages, as evidenced by the legislative history of the provision and by other provisions and the structure of the Act, shows that Congress did not intend that an employee should be allowed to waive his right to liquidated damages. P. 706.

3. Exceptional circumstances of the kind held to justify a waiver agreement such as was upheld in Fort Smith & Western R. Co. v. Mill, 253 U.S. 206, are not here involved. P. 709.

4. The right of the employee to liquidated damages under § 16(b) does not depend on whether the employee is compelled to sue for minimum wages due. P. 711.

5. Absence from the Fair Labor Standards Act of a specific provision prohibiting waivers of rights under the Act is not to be construed as permitting such waivers. P. 712.

6. An employee's release and waiver of rights to minimum wages and liquidated damages under the Fair Labor Standards Act, in consideration of a sum known by both employer and employee to be less than the statutory minimum wages due, is void. P. 713.

7. It is unnecessary here to determine questions of the validity and effect of agreements between employer and employee in settlement of claims arising under the Act where there is a bona fide dispute between the parties. P. 714.

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8. The question of the right to interest on sums recoverable under § 16(b) of the Fair Labor Standards Act is one of federal, not local, law. P. 715.

9. An employee recovering minimum wages and liquidated damages under § 16(b) of the Fair Labor Standards Act is not entitled to interest on the sums so recovered. P. 715.

293 N.Y. 666, 56 N.E.2d 259, affirmed. 144 F.2d 584, affirmed. 144 F.2d 292, reversed in part.

Certiorari, 323 U.S. 698, 702, to review decisions in three cases under the Fair Labor Standards Act.

REED, J., lead opinion

MR. JUSTICE REED delivered the opinion of the Court.

The writs of certiorari granted in these three cases present questions as to the interpretation of Section 16(b) of the Fair Labor Standards Act of 1938, 52 Stat. 1060 at 1069, which provides that an employer who violates the

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minimum wage and maximum hour provisions of the Act

. . . shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. . . .1

Cases No. 445 and No. 554, raise the question whether an employee subject to the terms of the Act can waive or release his right to receive from his employer liquidated damages under Section 16(b). Case No. 421 presents the issue of whether, in a suit brought pursuant to the provisions of Section 16(b), the employee is entitled to interest on sums recovered as wages and liquidated damages under that section. Since these three cases involve similar problems relating to the interpretation of Section 16(b) and the Congressional policy behind its adoption, all three cases will be dealt with in one opinion. See also No. 462, post, p. 720.

No. 445

The petitioner, Brooklyn Savings Bank, owned and operated an eleven-story office building in which the respondent was employed as a night watchman during a two year period from November 5, 1938, to August 30, 1940. Since a substantial portion of that building was

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devoted to the production of goods for commerce,2 the respondent was entitled to overtime compensation under the provisions of Section 7 of the Fair Labor Standards Act.3 52 Stat. 1063. No such compensation was paid at that time. However, in November, 1942, over two years after the respondent had left petitioner's service, the petitioner computed the statutory overtime compensation due the respondent and offered him a check for $423.16 in return for a release of all of his rights under the Act. The respondent signed the release and took the check. Since this sum did not include any payment for liquidated damages provided for in Section 16(b) of the Act, the respondent subsequently instituted the present proceeding in a New York City Municipal Court to recover liquidated damages due him under Section 16(b). The complaint was dismissed on the grounds that respondent failed to prove a cause of action and also that the respondent "released any claim for liquidated damages or counsel fees." The Appellate Term reversed, per curiam, holding that respondent was employed in the production of goods for commerce within

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the meaning of the Fair Labor Standards Act, and was entitled therefore to recover liquidated damages by reason of petitioner's default in making overtime payments as required by Section 7 of the Act.4 This decision was affirmed by the New York Appellate Division5 and by the New York Court of Appeals.6 Since the New York Court of Appeals decided a federal question of substance not heretofore determined by this Court, we granted certiorari7 limited to the question of whether the respondent's release of all further claims and damages under the Act, given at the time he received payment of the overtime compensation due under the Act, is a defense to an action subsequently brought solely to recover liquidated damages. The jurisdiction of this Court rests on Section 237(b) of the Judicial Code.

No. 554

The petitioner in this second case operated a box factory in which he employed the respondent during the period from October, 1938, the effective date of the Fair Labor Standards Act, to November, 1942, when respondent was discharged. During this period, the respondent worked hours in excess of the statutory maximums in effect during this period. Petitioner failed to pay respondent time and one-half for overtime, as required by the Act. In September, 1942, the Wage and Hour Administration procured an injunction, by consent, prohibiting the petitioner from violating the Act. In November, 1942, the petitioner tendered the respondent $500 for wages due and owing under the Act, the latter accepting the money and signing a

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general release of all claims against petitioner under the Act. Both parties knew at this time that more than $500 was due to respondent for minimum wages and overtime pay under the Act. Shortly thereafter, the respondent engaged counsel to recover the balance due him under the Act. Petitioner, before suit was filed, tendered the balance of the statutory wages due, but respondent refused to accept it because it did not include an equal sum for liquidated damages. Thereupon, the respondent brought suit for $276.05, the balance of the statutory wages due respondent, and $776.05, being liquidated damages equal to the whole amount ($500 plus $276.05) which had originally been unlawfully withheld. In his answer, the petitioner pleaded settlement of respondent's claim for $500, [65 S.Ct. 900] the release given by respondent pursuant to such settlement, and the petitioner's subsequent tender of a check for the deficiency in statutory minimum and overtime wages due. The District Court granted judgment for the respondent relying on Guess v. Montague, 140 F.2d 500, which held invalid a settlement agreement on the part of employees to accept less than the statutory minimum wage.8 The Circuit Court of Appeals for the Fourth Circuit affirmed.9

Because the decision of the Circuit Court of Appeals decided an important question of federal law which has not been, but should be, settled by this Court, we granted certiorari10 limited to the question of whether there had been a compromise of respondent's claim. Jurisdiction of this Court rests on Section 240(a) of the Judicial Code.

The petition in No. 445 raises the question of whether an employee, accepting from his employer a delayed payment

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of the basic statutory wages due under the Act, can validly release and waive and further right to recover liquidated damages under the provisions of Section 16(b).11 A preliminary question arises as to whether respondent's release was given in settlement of a bona fide dispute between the parties with respect to coverage or amount due under the Act, or whether it constituted a mere waiver of his right to liquidated damages. The state courts made no findings of fact on this issue. Where a state court fails to pass on evidence or make findings of fact because under their respective views the fact referred to are immaterial, we are not relieved from the duty of examining the evidence for the purpose of determining what facts reasonably might be, and presumably would be, found therefrom by the state court. Merchants' Nat. Bank v. Richmond, 256 U.S. 635, 638; Carlson v. Curtiss, 234 U.S. 103, 105; cf. United Gas Co. v. Texas, 303 U.S. 123, 143, 625; Creswill v. Knights of Pythias, 225 U.S. 246, 261. We think the record in this case shows that the release was not given in settlement of a bona fide dispute between employer and employee. Petitioner undertook to pay the respondent after our decision in Kirschbaum v. Walling, 316 U.S. 517, which determined the applicability of the Fair Labor Standards Act to building operators like the petitioner. Petitioner's answer in the Municipal Court merely relied upon payment of the statutory liability and the release of other claims. With the exception of the recital in the release, there is nothing in the record which shows that the respondent's release was obtained as the result of the...

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