On March 29, 2016, United States District Court Judge Abdul Kallon entered an order finding that ignorance of the law could not excuse an Alabama employer’s failure to pay overtime to its employees. See Ingram v. Passmore, No. 2:14-cv-00004-AKK, 2016 WL 1212570 (Mar. 29, 2016).
In Ingram, Passmore admitted that he failed to pay overtime to office workers. Based on that admission, the Fair Labor Standards Act would generally require that the employees receive compensatory damages equal to the unpaid overtime, plus “an additional equal amount in liquidated damages.” But, the FLSA also gives courts discretion to deny liquidated damages if an employer establishes that it failed to pay overtime based upon a good faith belief that its conduct complied with the FLSA.
So, Passmore asked Judge Kallon to exercise his discretion and deny liquidated damages to the office workers. Passmore asked “the court to excuse his failure due to his purported lack of knowledge and his belief that the FLSA did not apply to him.” Judge Kallon flatly rejected that argument, finding that Passmore would be liable if he “had the opportunity to acquire the knowledge through reasonable diligence.” In Judge Kallon’s words: “In ascertaining an employer’s good faith, ignorance of the law is insufficient to establish the employer’s reasonableness.”
Ingram demonstrates the importance of conducting a regular inventory and review of your employees to ensure that all eligible employees are receiving overtime. Courts will not be lenient on employers who could have paid overtime, but failed to do so.