Overtime violations under the FLSA trigger liability for both the unpaid overtime as well as liquidated damages, i.e., a penalty equal to the amount of unpaid overtime. An employer may avoid liquidated damages if it acted in good faith and had reasonable grounds to believe that its actions were lawful. However, a recent case confirms that ignorance of the facts or the law will not support such a defense.
In McGrath v. Central Masonry Corp., a Colorado federal court held that an employer was liable for liquidated damages because management was aware that the plaintiff was performing extra work without compensation, even though the plaintiff had not formally recorded the work on his time sheets and the employer claimed that it was not aware that the work constituted overtime. The court also rejected the employer's argument that it mistakenly thought that its policies complied with the FLSA, noting that the employer never consulted with a lawyer or other expert in personnel matters to ensure compliance. The court stated that the company's unlawful practices and lack of expert consultation warranted a jury's finding that the employer's conduct was either willful or in reckless disregard of the law, thus justifying a liquidated damages award.