Employers in New Jersey and around the country can face significant penalties for retaliating against workers who have made harassment or discrimination claims, and a ruling by a federal appeals court indicates that sanctioning employees who have filed lawsuits over unpaid wages or overtime could also be costly. The ruling, which was handed down by the U.S. Court of Appeals for the 5th Circuit, allowed a maintenance worker to recover damages for emotional distress in a Fair Labor Standards Act case.
The real estate company involved discounted the rent on the maintenance worker's apartment as part of his compensation package. However, the worker received a notice ordering him to vacate the premises just three days after he filed a lawsuit over unpaid overtime. The notice allowed the man to remain in his apartment only if he paid a sum equal to the rent discounts he had received since taking up his position.
A district court ruled in the worker's favor and awarded him nominal damages, but he filed an appeal asking for additional damages for emotional distress. The anti-retaliation provisions of the Fair Labor Standards Act were strengthened in 1977, and the appeals court ruled that damages for emotional distress were appropriate in this case. Damages of this type are difficult to quantify and hard to predict, and employers may be wise to be extremely cautious when taking any kind of disciplinary action against workers who have filed wages and hours complaints.
Workers who have been treated unfairly are sometimes reluctant to file complaints because they fear retaliation, but this case shows that employers take great risks when they behave in this way. Attorneys familiar with employee rights could explain the protections provided by federal and state labor laws, and they may also scrutinize discrimination, harassment or wage and hour complaints to determine whether or not claiming damages for emotional distress is warranted.