Employees in overtime lawsuits recover attorneys’ fees when they win or obtain a favorable settlement

In order to recover attorney’s fees, an employee in a minimum wage and/or overtime lawsuit need only to obtain a favorable verdict or a favorable settlement.  Employees in wage and hour lawsuits can recover attorneys’ fees on an hourly basis, even when they have a contingency fee agreement.  Most employees who sue a former employer for unpaid overtime wages, or unpaid minimum wages, will be represented by an attorney on a percentage basis, called a contingent fee.  However, despite having this agreement with the attorney, employees who successfully recover their overtime or minimum wages can petition a court to have attorneys’ fees awarded to them on an hourly basis.  See Lyle v. Food Lion Inc., 954 F.2d 984, 988 (4th Cir. 1992).  This could be good news for employees because the calculation of attorneys’ fees on an hourly basis can result in higher fee awards for employees who win their cases.  Jackson v. Estelle’s Place, 391 Fed. Appx. 239, 243-244 (4th Cir. 2010).

As a result, the amount of attorneys’ fees recovered by the prevailing overtime plaintiff is not necessarily limited to an amount that is equal to or less than the damages recovered.  As one example of a common situation, the employees in Jackson v. Estelle’s Place, 391 Fed. Appx. 239 (4th Cir. 2010), sued their former employer for unpaid overtime wages under the Fair Labor Standards Act (FLSA).  The six employees recovered $19,954.34 in unpaid wages, and $36,000 in attorneys’ fees.  Id at 241.  The Fourth Circuit Court of Appeals upheld this award, noting that the District Court had already properly reduced the attorneys’ fee award because of the limited degree of success in getting damages for the workers.  This means while it is appropriate for courts to consider the amount of damages in limiting or reducing attorney fee awards, this does not mean that the fee award must be reduced to an amount at or below the damages recovered.

One reason that attorney fee awards are allowed to be larger than the amount of damages is that the amount of time required to complete a case on behalf of an employee (plaintiff) is sometimes very large in proportion to the amount of damages recoverable.  Lawyers for plaintiffs often do not control the amount of time that their cases require.  An employee must respond to all discovery requests and motions by the employer, but the employer decides how many discovery requests and motions to serve, and of what complexity.  Thus, a rule that limited plaintiffs to an amount of fees equal to or less than their damages would discourage attorneys’ from taking time consuming cases even when they have solid legal and factual merit.  Such a rule would also encourage defendant employers to delay settlement and serve enormous quantities of discovery and motions in the hope of persuading a poor plaintiff (or lawyer) to give up.

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