D. A. Schulte, Inc. v. Gangi

Background

A building owner paid overtime wages to its maintenance and service employees after a new ruling suggested those workers might be covered by the Fair Labor Standards Act. The owner got signed releases from employees and refused to pay the additional equal amount called "liquidated damages." The employees sued to recover those liquidated damages. The District Court said the releases settled the dispute; the Court of Appeals disagreed, and the Supreme Court agreed with the Court of Appeals.

Reasoning

The Court asked whether the Act allows employers and employees to settle away liquidated damages in a genuine dispute about whether the law applied, when overtime wages were paid in full. The Court held such private bargains cannot eliminate the liquidated damages remedy. It explained that those damages serve both to compensate employees and to help enforce the law, and allowing settlements would undermine Congress’s goal of protecting low-paid workers and assuring prompt payment. The Court also decided that the building’s maintenance workers were covered because enough tenants were producing garments for businesses that regularly sent products in interstate commerce, so the workers could reasonably anticipate interstate movement of the goods.

Real world impact

Employers cannot rely on a simple release to avoid statutory liquidated damages after paying wages. Workers in similar maintenance jobs are more likely to be covered when building tenants produce goods that enter interstate commerce. The ruling emphasizes statutory protections over private compromise.

Dissents or concurrances

A dissenting Justice argued Congress did not clearly forbid good‑faith settlements and that the Court should not bar private compromise in cases without obvious exploitation.