(a) Section 11 of the Portal Act provides that in any action brought
under the Fair Labor Standards Act to recover unpaid minimum wages,
unpaid overtime, compensation, or liquidated damages, the court may,
subject to prescribed conditions, in its sound discretion award no
liquidated damages or award any amount of such damages not to exceed the
amount specified in section 16 (b) of the Fair Labor Standards
Act.137
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137 Section 16(b) of the Fair Labor Standards Act provides
that an employer who violates the minimum--wage or overtime provisions
of the act shall be liable to the affected employees not only for the
amount of the unpaid minimum wages or unpaid overtime compensation, as
the case may be, but also for an additional equal amount as liquidated
damages. The courts have held that this provision is ``not penal in its
nature'' but rather that such damages ``constitute compensation for the
retention of a workman's pay'' where the required wages are not paid
``on time.'' Under this provision of the law, the courts have held that
the liability of an employer for liquidated damages in an amount equal
to his underpayments of required wages become fixed at the time he fails
to pay such wages when due, and the courts were given no discretion,
prior to the enactment of the Portal-to-Portal Act, to relieve him of
any portion of this liability. See Brooklyn Savings Bank v. O'Neil, 324
U.S. 697; Overnight Motor Transp. Co. v. Missel, 316 U.S. 572.
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(b) The conditions prescribed as prerequisites to such an exercise
of discretion by the court are two: (1) The employers must show to the
satisfaction of the court that the act or omission giving rise to such
action was in good faith; and (2) he must show also, to the satisfaction
of the court, that he had reasonable grounds for believing that his act
or omission was not a violation of the Fair Labor Standards Act. If
these conditions are met by the employer against whom the suit is
brought, the court is permitted, but not required, in its sound
discretion to reduce or eliminate the liquidated damages which would
otherwise be required in any judgment against the employer. This may be
done in any action brought under section 16(b) of the Fair Labor
Standards Act, regardless of whether the action was instituted prior to
or on or after May 14, 1947, and regardless of when the employee
activities on which it is based were engaged in. If, however, the
employer does not show to the satisfaction of the court that he has met
the two conditions mentioned above, the court is given no discretion by
the statute, and it continues to be the duty of the court to award
liquidated damages.138
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138 See Conference Report, p. 17; remarks of Representative
Walter, 93 Cong. Rec. 1496-1497; President's message of May 14, 1947, to
the Congress on approval of the Portal Act, 93 Cong. Rec. 5281.
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(c) What constitutes good faith on the part of an employer and
whether he had reasonable grounds for believing that his act or omission
was not a violation of the Fair Labor Standards Act are mixed questions
of fact and law, which should be determined by objective tests.139
Where an employer makes the required showing, it is for the court to
determine in its sound discretion what would be just according to the
law on the facts shown.
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139 Cf. Secs. 790.13 to 790.16.
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(d) Section 11 of the Portal Act does not change the provisions of
section 16(b) of the Fair Labor Standards Act under which attorney's
fees and court costs are recoverable when judgment is awarded to the
plaintiff.
