5th Cir. Awards Attorney’s Fees Against DOL for FLSA Prosecution Brought in Bad Faith

On July 2, 2015, in the case of Gate Guard Services, L.P., v. Perez, Secretary of Labor, the U.S. Court of Appeals for the Fifth Circuit held that the Department of Labor’s (DOL) prosecution of a Fair Labor Standards Act (FLSA) case was so egregious, in both the investigation, processing and, finally, in the defense of its actions in court, that the DOL was ordered to pay Gate Guard’s attorney’s fees–which may be as much as $1 million.

The DOL cited Gate Guard, a small company which contracts with oil companies to provide them with gate attendants at remote drilling sites, with mischaracterizing their employees’ employment status as independent contractors. The initial demand from the DOL was $6 million in back wages and unpaid overtime, and the matter was eventually litigated when Gate Guard sought a declaratory ruling, and attorney’s fees, that it was in compliance with the FLSA.

According to the Court of Appeals, not only was the initial investigation terribly mishandled, but the DOL’s lead counsel, during the taking of depositions, was especially “disruptive”, requiring court supervision of future depositions, and the DOL continued with the litigation even after discovering that the Army Corps of Engineers, which also uses gate attendants, classifies these workers as independent contractors.

Writing for the Court of Appeals, Judge Jones states that “The government’s intransigence in spite of its legally deteriorating case, combined with extreme penalty demands and outrageous tactics, together support a bad faith finding. The government’s extraordinarily uncivil and costly litigation tactics strongly suggest that it hoped to prevail by oppressively pursing a very weak case.”