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The legislative history of the Fair Labor Standards Act (Act) shows an intent on the part of Congress to protect certain groups of the population from sub-standard wages and excessive hours which endangered the national health and well-being and the free flow of goods in interstate commerce. The statute was a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in interstate commerce. To accomplish this purpose standards of minimum wages and maximum hours were provided. No one can doubt but that to allow waiver of statutory wages by agreement would nullify the purposes of the Act. The Supreme Court is of the opinion that the same policy considerations which forbid waiver of basic minimum and overtime wages under the Act also prohibit waiver of the employee's right to liquidated damages.
Respondent employees, in consolidated actions, sought to recover wages and liquidated damages under § 16(b) of the Fair Labor Standards Act of 1938 (Act), 52 Stat. 1060. The suits were brought in different appellate courts. Two respondents had executed waivers of their rights to recover such damages. The lower court found respondents who executed waivers were barred from receiving liquidated damages under the Act. The third respondent was awarded interest on the wages and liquidated damages it had recovered. The United States Supreme Court granted writs of certiorari.
The Court reversed the judgments with respect to respondents who had allegedly waived their rights to recover such damages, finding that their alleged waivers did not bar them from subsequently seeking to recover liquidated damages because such a waiver was improper on policy grounds. According to the Court, to permit an employer to secure a release from the worker who needed his wages promptly will tend to nullify the deterrent effect which Congress plainly intended that the Fair Labor Standards Act of 1938, § 16(b), 52 Stat. 1060, should have. The Court further held that the third respondent was not entitled to interest on sums recovered as wages and liquidated damages because to allow respondent to recover interest on such sums would have the effect of giving respondent double compensation for damages arising from delay in the payment of the basic minimum wage. The Court found Congress intended to preclude recovery of interest on those sums.