Opinion ID: 403759
Heading Depth: 2
Heading Rank: 3

Heading: The Remedy Under the Equal Pay Act

Text: 72 An employer who violates the Equal Pay Act is subject to the remedial provisions of the Equal Pay Act's statutory parent, the FLSA. For relief purposes, the FLSA does not distinguish between wages that were sexually discriminatory and wages that were deficient for other reasons, such as a failure to reach the current minimum. 29 U.S.C. § 206(b) (Supp. III 1979). The remedial provisions of the FLSA originally were simple: an employer was doubly liable to affected employees: for unpaid wages and an additional, equal amount in liquidated damages. 29 U.S.C. § 216(b), (c) (Supp. III 1979). In the original FLSA both awards were mandatory. Pub.L.No. 718, 52 Stat. 1069 (1938). Concerned that this remedial provision was sometimes unjustly harsh, Congress amended the FLSA by two provisions relevant here, Portal to Portal Pay Act of 1947 (Portal Act), Pub.L.No. 49, 61 Stat. 84 (1947). First, the Portal Act limited FLSA recovery to two years, or three years in the event of a willful violation. 29 U.S.C. § 255(a) (1976). For a named plaintiff, this period is calculated from the date suit was filed; for others, it is calculated from the date they opted into the lawsuit, id. § 216(c) (Supp. III 1979). Second, awards of liquidated damages are no longer mandatory. If the employer convinces the court that he paid the deficient compensation in good faith and had reasonable grounds for believing he was in compliance with the FLSA, the court has discretion to forego any or all of the allowable award of liquidated damages. Id. § 260 (1976). 73 In the case at bar, Judge Richey awarded the Smyth operators the difference between their actual wages and what they would have earned as bookbinders. J.A. 220. Because he found GPO's violation of the Equal Pay Act willful, J.A. 197, he specified that plaintiffs could recover back wages up to a limit of three years before the date they consented to join the suit. J.A. 216. He also awarded full liquidated damages to each Smyth operator. J.A. 220. 74 GPO raises interlocking objections to this remedial decree. First, GPO objects that Judge Richey's award of Equal Pay Act relief extends retroactively in some cases more than two years before the FLSA governed GPO. 19 GPO also urges us to rescind the award of liquidated damages, contending that it acted in good faith. Finally, GPO contends that the FLSA forecloses a retroactive award of liquidated damages here, because GPO had the best of all reasons for believing that its actions were not illegal under the FLSA-namely, that GPO was not covered by the FLSA. We dispose of these contentions in turn. 20 75 1. Retroactive Liability Under the FLSA Amendments of 1974. Courts often must decide whether a lawsuit is properly resolved under legal rules that were adopted after the controversy arose. A basic rule applied to this problem of retrospectivity is the sensible accommodation that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is statutory direction or legislative history to the contrary. Bradley v. School Board of the City of Richmond, 416 U.S. 696, 711, 94 S.Ct. 2006, 2016, 40 L.Ed.2d 476 (1974) (award of attorneys fees incurred in 1971 authorized by the Education Amendments of 1972). 21 Since every statute must pass constitutional muster, one outer boundary of this doctrine is set by the constitutional prohibition of ex post facto laws-a prohibition that has been interpreted to bar the retroactive imposition of penal liability. 22 To conclude that the period of GPO's liability under the 1974 FLSA amendments may extend before 1974, we must therefore resolve three questions: first, whether the legislative history of the amendments prohibits their retrospective application in this manner; second, whether the application would result in manifest injustice; and finally, whether the application would run afoul of the constitutional prohibition of ex post facto laws. We begin with the legislative history. 76 Neither statutory language nor legislative history contains the slightest hint that Congress intended to prohibit retroactive application of the 1974 extension of the FLSA to federal employees. The extension of FLSA coverage to the federal government was but a small part of Congress' general aim 77 to incorporate into the Fair Labor Standards Act a breadth of coverage and a minimum wage level sufficient to bring the Act closer to meeting its basic stated objective-the elimination of labor conditions detrimental to the maintenance of the minimum standard of living necessary for the health, efficiency and general well being of workers. 78 Fair Labor Standards Amendments of 1974, S.Rep.No.690, 93d Cong., 2d Sess. 1-2 (1974); see also H.R.Rep.No.913, 93d Cong., 2d Sess. 9 (1974) U.S.Code Cong. & Admin.News p. 2811. The Amendments' sponsors emphasized that the legislation was intended to be comprehensive. E.g., 120 Cong.Rec. 4702 (1974) (Coverage should be interpreted broadly; and every effort should be made to insure that those employees who have been victims of violations of this act are made whole.) (Remarks of Sen. Williams). Moreover, similar amendments passed in 1973 had been vetoed by President Nixon, 119 Cong.Rec. 37,719 (1973), and Congress regarded the 1974 package as long overdue. S.Rep.No.690, 93d Cong., 2d Sess. 3 (1974); H.R.Rep.No.913, 93d Cong., 2d Sess. 4 (1974). 79 Although other features of the 1974 Amendments, such as the extension of FLSA coverage to domestic workers, were highly controversial, the extension to federal employees was not debated extensively. Once concerns about conflict with the civil service statutes has been allayed by bringing administration of the extension under the Civil Service Commission, see S.Rep.No. 690 at 23; H.R.Rep.No. 913 at 29, the extension passed Congress almost without discussion. All seemed to agree that the federal government should be held to the standards that it, in turn, imposed upon private industry. E.g., 120 Cong.Rec. 4697 (1974) (Remarks of Sen. Williams). The congressional debates contain no mention of retrospectivity as a potential problem, and indeed contain no mention of the fact that the Amendments would bring the federal government within the reach of the Equal Pay Act. 80 In contrast, Congress was troubled by the potentially harsh impact of implementation of some of the other 1974 Amendments. For example, the Amendments attempted to bring municipal policemen and firemen within the scope of the FLSA. Concerned that FLSA overtime pay requirements would impose hardship on local governments, Congress provided specifically for the phase-in of the requirements. Pub.L.No. 93-259, 88 Stat. 60-61; S.Rep.No. 690 at 24; H.R.Rep.No. 913 at 29. See also 120 Cong.Rec. 5734 (1974) (Remarks of Sen. Williams). Congress cushioned the impact of the 1974 Amendments when it found reason to do so; yet Congress appears to have found no reason to insulate the federal government against the immediate impact of the provisions of the FLSA, including the Equal Pay Act. The legislative history thus clearly permits the retrospective reach of the Equal Pay Act remedy. 81 Our second matter of inquiry is whether it would be manifestly unjust to apply the 1974 FLSA Amendments to GPO retrospectively. We perceive no manifest injustice in doing so. Bradley outlined a three factor test of when it is unjust to apply legal rules to controversies that antedate them: (a) the nature and identity of the parties, (b) the nature of their rights, and (c) the nature of the impact of the change in law upon those rights. 416 U.S. at 717, 94 S.Ct. at 2019. 82 Under the nature and identity of the parties, the Bradley court considered the balance of power between the parties and the interests advanced on both sides. In Bradley, the plaintiffs were children asserting their constitutional rights against a discriminatory public school system. The Court found no injustice in imposing a statutory award of attorneys' fees retroactively against such a defendant. Our situation is parallel. The plaintiffs are working women who have been unfairly denied wages by their own government. The defendant, GPO, is hardly the innocent actor being subjected to surprising and unexpected obligations. At least from 1969 on, see infra at p. 288, it had been told not to discriminate as it was found to have done. The nature of the parties in this litigation cuts in favor of retroactive application of the 1974 FLSA amendments to GPO. 83 Bradley next admonished that the nature of the parties' rights and the effect on such rights must be factored in. Retrospective application of a statute has been found manifestly unjust when it would deprive individuals of vested rights. For example, in Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 621, 11 L.Ed.2d 576 (1964), the Court refused to deny monetary restitution to a federal employee who had received a final ruling in his favor, even though regulations had changed in the interim. GPO, by contrast, has never had a right to discriminate, even though sovereign immunity for a long time insulated GPO from liability for its transgressions. 23 Imposing pre-1974 liability on GPO will not violate GPO's rights; it will vindicate plaintiffs' rights to be free of discrimination. Nor will it adversely affect the rights of other GPO employees. We therefore find no injustice in imposing the full three-year period of FLSA liability upon GPO. 84 Our final inquiry is whether application of the 1974 Amendments to allow plaintiffs to recover for a period before 1974 would run afoul of the constitutional ban on ex post facto laws. As the ban has been interpreted to bar only retroactive penal liability, we must consider whether monetary awards under the FLSA are appropriately characterized as penal, or as merely compensatory for the purpose at hand. 85 The original FLSA mandated courts to award prevailing plaintiffs both unpaid wages and liquidated damages. Pub.L.No. 718, 52 Stat. 1069 (1938). Whereas the wage award clearly compensates employees for lost pay, the award of liquidated damages might appear aimed to deter or penalize wayward employers. Almost immediately after the passage of the FLSA, however, the Supreme Court determined that the mandatory liquidated damages were also compensatory, intended to reimburse workers for intangible losses-difficult to prove but nonetheless the very real consequences of unfair wages. Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945); Overnight Motor Transport Co. v. Missel, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942). 86 The Portal Act amendments of 1947, however, require review of whether liquidated damages under the FLSA are compensatory. The Portal Act allows the trial court to forgive liquidated damages when the employer shows that he acted in good faith and reasonably believed he had complied with the statute. 29 U.S.C. § 260 (1976). That innocent employers may now be spared FLSA liquidated damages could suggest that these damages are now penal. See, e.g., Richards, Monetary Awards in Equal Pay Act Litigation, 29 Ark.L.Rev. 328, 349 (1975). This court has yet to resolve this issue. Laffey, 567 F.2d at 465 n.271. 87 We now conclude that FLSA liquidated damages remain compensatory in character, even though they may be remitted. 24 Nothing in the statutory history of the Portal Act suggests that Congress was dissatisfied with the determination that liquidated damages were compensatory. Instead, the history of the Portal Act is replete with evidence that § 260 was intended to provide courts with flexibility when an award of liquidated damages would be unfair to the employer. E.g., H.R.Rep.No. 71, 93 Cong.Rec. 1489 (1947); 93 Cong.Rec. 1500 (1947) (Remarks of Rep. Robson); id. at 4389 (Remarks of Rep. Gwynne); see Hays v. Republic Steel Corp., 531 F.2d 1307, 1310 (5th Cir. 1976). A legislative decision to allow courts to balance compensating employees against imposing costs on employers hardly transforms the award to a penalty. Moreover, other sections of the FLSA do impose criminal penalties for willful violations, including willful violations of the Equal Pay Act. 29 U.S.C. §§ 216(a), 215(a) (2) (1976). 25 88 Our determination that FLSA liquidated damages are not penal disposes of our final concern about whether plaintiffs' Equal Pay Act recovery period may reach before 1974. We therefore turn to GPO's contentions that it was entitled to remission of all or part of the liquidated damages award because of the equities it cites. 89 2. GPO's Good Faith. Section 260 allows the trial judge to remit liquidated damages if an employer shows both good faith and reasonable grounds for believing that he had conformed with the FLSA. As evidence of its good faith, GPO brings to our attention both the apprenticeship program and the fact that wages at GPO were set by negotiations with the union. Brief at 50. These contentions merit only brief consideration. 90 First, section 260 provides specifically that even if the employer meets his burden of proof, a decision to spare him liquidated damages remains within the sound discretion of the trial judge. Remission is not obligatory; 26 given the record in this case, we can hardly say that Judge Richey abused his discretion here. 91 Second, a showing of good faith does not suffice for defendant's two-pronged burden under § 260. Defendants must show both subjective good faith and objectively reasonable grounds for believing that their actions complied with the statute. 29 C.F.R. § 790.22(b) (1980); Laffey, 567 F.2d at 463. Certainly after the FLSA applied to the federal government, GPO did not have reasonable grounds for believing itself in compliance with the statute. Judge Richey found that GPO had willfully violated the Equal Pay Act, because it was fully aware of the Equal Pay Act and adopted a deliberate and knowing course of conduct despite this awareness. J.A. 197. Indeed, GPO had been subject to a series of complaints, at least two unfavorable administrative reports, and finally, plaintiffs' lawsuit. GPO chose to defend the lawsuit, relying in large measure on traditional practices in the binding industry. However, as this court said in Laffey, That an employer and others in the industry have broken the law for a long time without complaints from employees is plainly not the reasonable ground to which the statute speaks. 567 F.2d at 465. 92 Finally, GPO's showing of good faith is highly ineffectual. Judge Richey explicitly found that the apprenticeship program itself had discriminated against bindery workers. J.A. 179-83; see discussion infra p. 285. As for its contention that wages were set by negotiation with the union, GPO cannot seek absolution by claiming that its discrimination was another's fault. E.g., Laffey, 567 F.2d at 465. 93 3. GPO's Grounds for Believing it had not Violated the FLSA. GPO's final contention is that it was entitled to remission of whatever portions of the liquidated damages award antedated the extension of the FLSA to GPO. As with GPO's protestations of good faith, this argument can be answered by noting that remission of liquidated damages is discretionary. It can also be answered by pointing out that § 260 imposes a two-pronged burden on employers, to show both that they acted in good faith and that they had reasonable grounds for believing their actions did not violate the FLSA. In the absence of a showing of good faith, see supra p. 282, GPO has failed to shoulder its burden under § 260. It may also be noted that wage discrimination based on sex violated federal employment policy declared by Executive Order years before the extension of the FLSA to GPO, see supra p. 264.