D. A. Schulte, Inc. v. Gangi
328 U.S. 108, 66 S. Ct. 925, 90 L. Ed. 1114 (1946)
Supreme Court of the United States · April 29, 1946
What the court decided
An employer cannot escape liquidated damages under the Fair Labor Standards Act by settling a genuine dispute over whether the Act covers its employees. Paying the back overtime in full and taking a signed release was not enough: "the remedy of liquidated damages cannot be bargained away by bona fide settlements of disputes over coverage." The Court expressly left open compromises of other kinds of disputes, "such as a dispute over the number of hours worked or the regular rate of employment."
Who won
The workers won. The Supreme Court affirmed the Second Circuit, which had reversed a judgment for the employer. Two Justices dissented.
Why it matters for workers
This is one of the two Supreme Court decisions behind the rule that a private release of federal wage claims is suspect. The question it left open, a release that settles a real dispute over hours worked, is still open in New York for a release signed before any lawsuit is filed.
Key passage: 328 U.S. 108 at 114-16.
Read the decision (PDF) Marked with official reporter pages for citation.
Source of the text: Library of Congress (official United States Reports, bound volume 328) — https://tile.loc.gov/storage-services/service/ll/usrep/usrep328/usrep328108/usrep328108.pdf. This page summarizes the decision in plain language; the court’s own words are in the PDF above.