What are liquidated damages?
In general, liquidated damages are an amount of predetermined, stipulated compensation to be recovered upon the occurrence of a particular event. They are often associated with delays on a project. The purpose of having a liquidated damages provision is to establish a pre-set amount of payment to address circumstances where damages are hard to determine or otherwise difficult to prove. Why would you include a liquidated damages provision in your contract? There are a few reasons that come to mind: • you prefer the certainty of the stipulated amount to the risk, cost, and uncertainty of proving actual damages, or • one party makes it a part of contract negotiations, and you link it to getting something in return, such as an early completion bonus. It pays to be careful when drafting a liquidated damages clause. Just because your contract has a “LIQUIDATED DAMAGES” section, it does not mean that it is a valid clause or that you will recover under it. For example, the pre-set liquidated d
FLSA provides that successful plaintiffs are usually entitled to double the amount of unpaid overtime wages, called “liquidated damages.” Essentially, liquidated damages are in lieu of interest. An employer can avoid paying liquidated damages only if it shows that it acted in good faith in failing to pay the correct overtime wages for all the work performed, and that it had a reasonable basis to believe that it need not pay for off the clock work. “Good faith” has a special meaning under the FLSA, and requires that employers have made specific investigation of the application of the FLSA to particular types of employees. Liquidated damages are the rule, not the exception. Employees are normally entitled to “liquidated damages” in cases where a court finds that an employer did not act in good faith in paying wages due and/or overtime wages.
These are damages an employee is entitled to receive if he or she brings a successful claim. The amount of damages are defined by the FLSA law as being double the unpaid wages due to the employee. Thus, if an employee is awarded $10,000 in unpaid wages, he or she may be entitled to get an additional $10,000 as liquidated damages, bringing the total recover to $20,000. These damages are essentially awarded in stead of lost interest. An employer can avoid paying liquidated damages only if it shows that it acted in good faith and that it had a reasonable basis to believe its practices complied with the law. “Good faith” has a special meaning under the FLSA, and requires that employers have made specific investigation into the application of the FLSA to the particular situation.
A. The FLSA provides that a successful employee is entitled to double the amount of unpaid back wages, called “liquidated damages.” Essentially, liquidated damages are in lieu of interest. An employer can avoid paying liquidated damages only if it shows that it acted in good faith in failing to pay for off the clock work, and that it had a reasonable basis to believe that it need not pay for off the clock work. “Good faith” has a special meaning under the FLSA, and requires that employers have made specific investigation of the application of the FLSA to particular types of employees. Liquidated damages are the rule, not the exception. Employees are normally entitled to liquidated damages.
