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Damage Control

When employees initiate lawsuits after separating from employment, they must typically meet certain burdens if they seek money damages, including a demonstration that they mitigated, or limited, their damages by pursuing a diligent job search. While this “duty to mitigate” damages is used routinely to limit back pay awards in discrimination cases, the defense seems to have a slightly different character in FLSA cases. In fact, courts appear to be divided as to what it actually means in FLSA litigation (and whether it applies at all). Some FLSA claims arise in cases of retaliatory termination for engaging in protected activities like demanding unpaid wages. This is analogous to both discriminatory discharge and retaliation for engaging in activities protected by discrimination laws. However, FLSA cases also present when employees have lost earnings but remain employed, and this scenario complicates the arguments for a reduction of back pay awards in FLSA suits under the theory of the plaintiff’s duty to mitigate.

It is important to note several terms in the world of mitigating damages in employment cases. In discrimination cases, the “duty to mitigate” typically refers to the requirement of a diligent job search in the event that an employee separates from employment. “Mitigation” used alone typically refers to the identification of post-termination earnings that may be deducted from back pay awards, regardless of any duty owed by the plaintiff (sometimes called “offsets”). Meanwhile, the related “doctrine of avoidable consequences,” as used in FLSA cases, refers to an employee’s obligation to report hours accurately so as to give the employer a reasonable chance to comply with the FLSA. This concept was traditionally applied in tort law, and may be referred to as contributory negligence in some cases.

Regarding the duty to mitigate, several courts in the Southern District of Florida have recently found that a plaintiff in an FLSA case is under no duty to mitigate damages in the traditional sense. In fact, those courts go as far as saying that the duty to mitigate defense fails as a matter of law in FLSA cases, and is simply unavailable to defendants.

In a recent opinion in the Northern District of Georgia, however, the court refused to find that the duty to mitigate defense failed as a matter of law, and denied a motion for a judgment on the pleadings/motion to strike where the defendant had asserted the defense (but had done so without providing any supporting facts). In its response to the plaintiff’s argument that the duty to mitigate was not available as a defense, the defendant suggested that there was a “trend” that courts are increasingly willing to recognize a plaintiff’s duty to mitigate. However, the defendant relied on cases applying the doctrine of avoidable consequences. In essence, the defendant asserted the affirmative defense of “failure to mitigate,” but when challenged on its precise meaning, recast the defense as the doctrine of avoidable consequences. Incidentally, this is an excellent reason to require defendants to provide factual support for affirmative defenses (another disputed issue, and a topic for another day).

The “trend” that arguably supported the denial of the plaintiff’s motion, however, is likely to be confined to a particular kind of FLSA case in which: (1) the plaintiff is responsible for reporting hours, (2) the plaintiff deliberately underreported hours worked, and (3) the defendant had no way of knowing that the plaintiff’s records were false. In an FLSA case in the Middle District of Georgia, the court summarized the limits of the doctrine of avoidable consequences: