When an employee wins a lawsuit against an employer brought under the Fair Labor Standards Act (“FLSA”), an employer must pay the employee’s reasonable attorneys’ fees and costs in addition to any judgment against it. Sometimes the attorneys’ fees and costs are more than the judgement itself. At least one employer has convinced a court that when an employer is successful, it may be entitled to recoup its litigation costs from the defeated employee.
Seven employees filed a lawsuit in federal district court against their employer claiming that they were misclassified as exempt employees. After the jury found in favor of the employer, the employer filed a motion seeking to collect $22,700 in costs from the employees under a federal rule (Fed. R. Civ. P 54(d)(1)) that provides that, with a few listed exceptions, costs are to be awarded to the prevailing party. The court denied the motion on the ground that the FLSA was a remedial statute and the fact that the FLSA itself is silent as to whether a successful employer is entitled to costs. The court, however, noted that it may have ordered the payment of costs and attorneys’ fees if the employees had filed their lawsuit in bad faith. The employer appealed, and the court of appeals vacated the district court’s decision. The circuit court held that although the FLSA is silent on the issue, Rule 54 independently gives courts the authority to award costs to prevailing parties unless a statue or rule prohibits doing so. Therefore, the circuit court sent the case back to the district court to determine whether the employees should have to pay the employer’s costs. It remains to be seen whether the district court will in fact award the employer its costs.
Although this case was decided in the 8th Circuit which doesn’t include Massachusetts, the FLSA is a federal statute that applies countrywide. Further, federal courts in Massachusetts have awarded costs to prevailing employers in discrimination and harassment lawsuits. An employee with a questionable case may think twice before filing a lawsuit if the employee is aware that if the lawsuit is unsuccessful, the employee may be on the hook for costs, which may be significant in a class action lawsuit. Lochridge v. Lindsey Mgt. Co., No. 14-3799 (8th Cir. 2016).