Brooklyn Savings Bank v. O'Neil

Background

These decisions arise from three related suits under the Fair Labor Standards Act. In one case a night watchman at an office building accepted a delayed overtime payment and signed a general release that did not mention liquidated damages. In another, a factory worker accepted $500 and signed a broad release even though both sides knew more pay was due. The third case asked whether a worker who recovers unpaid wages and liquidated damages can also get interest on those sums.

Reasoning

The Court asked whether an employee can validly waive the Act’s liquidated damages and whether interest is allowed on amounts recovered. Looking at the law’s purpose and history, the majority concluded Congress meant to protect low-paid workers and to deter employers from delaying pay. Liquidated damages are meant to compensate for harmful delay, and allowing ordinary releases where no genuine dispute exists would undermine the statute’s protective goal; therefore such waivers are invalid. On interest, the Court held that §16(b) already fixes compensation for delay, so adding interest would give double recovery and is inconsistent with Congress’s choice.

Real world impact

As a practical matter, employers cannot nullify a worker’s right to liquidated damages by obtaining a simple release when there was no real dispute over pay. Workers retain the right to sue for liquidated damages; however, courts may not add interest to awards under §16(b). The Court left open whether a true, good‑faith settlement of a genuine dispute can validly resolve claims.

Dissents or concurrances

A dissent argued the liquidated‑damages claim is a private damage claim and, unlike unpaid wages, was not treated as a public wrong by the statute, so a valid local release should be effective if obtained fairly.