In a wage and hour case brought under federal law, a worker who wins is entitled to have the employer pay their attorney’s fees and litigation costs on top of any back wages and damages awarded. That rule, set by 29 U.S.C. § 216(b), reverses the usual American practice of each side paying its own lawyer and is the main reason employment attorneys will take cases where the unpaid wages themselves are too small to justify private billing. How those fees get calculated, challenged, and sometimes cut is a separate fight that often matters as much as the wage claim.1Office of the Law Revision Counsel. 29 USC 216 – Penalties
The Fee-Shift Is Mandatory and One-Way
The Fair Labor Standards Act says a court “shall” allow a reasonable attorney’s fee to be paid by the defendant, along with costs of the action. That word leaves judges almost no room to deny fees to a worker who wins. The employer pays, and the worker keeps the full wage award.
The flip side does not apply. If the employer wins, the worker generally does not owe the employer’s legal costs. That asymmetry is deliberate: it keeps workers from being financially punished for trying to enforce the law, and it is what makes small-dollar wage claims economically viable to litigate. Many state wage statutes mirror this structure, so claims filed under state labor codes often carry the same protection.
Who Counts as a Prevailing Party
Fees are triggered by “prevailing party” status, which has a specific legal meaning. A worker qualifies when a court’s action produces a real change in the legal relationship between the parties, typically a judgment on the merits or a court-approved consent decree.2Legal Information Institute (Cornell Law School). Buckhannon Board and Care Home Inc v West Virginia Department of Health and Human Resources
What does not count is just as important. If an employer voluntarily changes its payroll practices after a lawsuit is filed but before any court order is entered, the worker usually cannot claim prevailing party status. The Supreme Court rejected this “catalyst theory” in Buckhannon, holding that a voluntary change in behavior, even if the lawsuit prompted it, lacks the necessary judicial stamp. A private settlement with no court involvement can make fee recovery harder depending on how the deal is papered.
Partial wins get scaled. The Supreme Court held in Hensley v. Eckerhart that hours spent on unsuccessful claims unrelated to the winning ones should be excluded, and that fees must be “reasonable in relation to the results obtained.”3Justia. Hensley v Eckerhart 461 US 424 (1983) A worker who technically prevails but recovers only a nominal amount may be a “prevailing party” on paper and still receive little or no fee award.
How the Fee Amount Gets Calculated
The standard method is the “lodestar”: multiply the hours reasonably spent by a reasonable hourly rate. The rate reflects what lawyers of similar experience charge for similar work in the geographic market where the case was litigated.4U.S. Department of Labor. Determining the Reasonable Hourly Rate – An Update on Recent Decisions and Evolving Issues The resulting number carries a strong presumption of reasonableness.
Why Fees Get Cut
Attorneys must submit detailed, contemporaneous time records for every hour claimed. Vague entries and “block billing,” where several tasks are lumped into a single time entry, are the fastest way to lose hours. Courts have cut fee awards by 10% or more when records made it impossible to evaluate whether individual tasks were reasonable. An entry reading “research and drafting” over a six-hour block gives a judge nothing to work with.
Beyond billing format, courts strip time for duplicative work, clerical tasks billed at attorney rates, and hours spent on claims the worker lost. The employer’s lawyers go through the records line by line looking for entries to challenge, so sloppy recordkeeping translates directly into a smaller check.
When the Lodestar Can Be Increased
The Supreme Court has sharply narrowed when upward adjustments survive. In Perdue v. Kenny A., the Court reaffirmed that the lodestar is “presumptively sufficient” and that enhancements require proof of rare circumstances the lodestar didn’t already capture.5Legal Information Institute (Cornell Law School). Perdue v Kenny A The surviving grounds are narrow: the hourly rate used didn’t reflect the attorney’s true market value, the case required extraordinary expenses over an exceptionally long period, or there was exceptional delay in receiving payment. Most enhancement requests fail. Courts also still consult the factors set out in Johnson v. Georgia Highway Express, such as the novelty of the issues and the results obtained, when evaluating reasonableness.6Justia. Johnson v Georgia Highway Express Inc 488 F2d 714 (5th Cir 1974)
Which Litigation Costs Are Recoverable
Separate from attorney’s fees, a prevailing worker is entitled to recover “costs of the action.” These are the out-of-pocket expenses required to run a case through the court system. Common recoverable costs include:
- Court filing fees, which currently run about $405 for a federal civil case.
- Service of process, typically $45 to $75 when a private process server is used.
- Deposition transcripts, which can add up quickly in cases with multiple witnesses.
- Copying and document production for records used as evidence or filed with the court.
Expert witness fees are the main gap. The Supreme Court has repeatedly held that, without explicit statutory authorization, courts cannot award expert fees beyond minimal per diem and travel allowances. The FLSA does not authorize expert fee recovery, so workers in wage cases generally cannot shift those costs to the employer, even when an expert’s payroll analysis was essential to winning. In cases involving years of pay records, that absorbed expense can run into thousands of dollars.
How a Rule 68 Offer Can Wipe Out a Fee Recovery
The most consequential tactical tool an employer has is the Rule 68 offer of judgment. At least 14 days before trial, the employer can formally offer to let judgment be entered for a specific amount. If the worker rejects the offer and then wins less at trial, the worker must pay the employer’s costs incurred after the offer was made.7Legal Information Institute (Cornell Law School). Rule 68 Offer of Judgment
Whether “costs” under Rule 68 includes attorney’s fees depends on the underlying statute. In Marek v. Chesny, the Supreme Court held that when a fee-shifting statute defines attorney’s fees as part of costs, those fees are subject to Rule 68’s cost-shifting mechanism.8Justia. Marek v Chesney 473 US 1 (1985) The FLSA lists “a reasonable attorney’s fee” and “costs of the action” as separate items, which has produced litigation over whether Rule 68 captures the fee component in FLSA cases. Some federal circuits say it does. Either way, a rejected Rule 68 offer creates real financial risk: at minimum, post-offer costs shift to the worker.
The practical lesson is to evaluate any Rule 68 offer against a realistic trial outcome, not the best-case one. Turning down a reasonable offer and winning less at trial can erase the fee-shifting advantage that made the case worth bringing.
The 14-Day Deadline to File the Fee Petition
Winning the wage case is only half the work. Collecting fees requires a separate motion. Under Federal Rule of Civil Procedure 54(d)(2), the attorney must file a motion for fees no later than 14 days after the court enters judgment.9Legal Information Institute (Cornell Law School). Federal Rules of Civil Procedure Rule 54 – Judgment Costs Miss that deadline without good cause and the right to fees can be waived entirely.
The motion identifies the judgment, the statute entitling the worker to fees, and the amount sought or a fair estimate. Detailed billing records and rate evidence follow on whatever schedule the court sets, often supported by declarations from other practitioners confirming the rate matches the local market. The employer then gets a chance to object to specific entries line by line.
Fees Keep Running on Appeal
When an employer appeals, the worker’s attorney continues spending time defending the victory, and that time is compensable. An attorney who successfully defends a judgment or fee award on appeal is entitled to fees for the appellate work, calculated by the same lodestar method.10U.S. Department of Labor. Section 28 – Attorneys Fees Fees are recoverable at each level of the process even if the attorney lost at an intermediate stage, as long as the worker ultimately prevails.
One timing point: a fee award typically is not enforceable until all appeals are exhausted. A judge can calculate the fee while the merits appeal is pending, but the employer does not owe the money until the dust settles. Supplemental fee petitions can be filed after the appeals conclude to capture the additional attorney time.
Taxes on the Fee Portion
This is where many workers get an unpleasant surprise. When an employer pays a court-ordered attorney fee, the IRS may treat the full settlement or judgment amount, including the portion that goes straight to the lawyer, as gross income to the worker. The result can be a tax bill on money the worker never personally received.
Federal law provides a safety valve. Under 26 U.S.C. § 62(a)(20), workers can take an above-the-line deduction for attorney fees paid in connection with claims of “unlawful discrimination,” and the tax code defines that term broadly to include any federal, state, or local law “regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits.”11Office of the Law Revision Counsel. 26 USC 62 – Adjusted Gross Income Defined Wage and hour claims fit squarely within that definition. The deduction is capped at the amount of the settlement or judgment included in gross income for the year, so it won’t produce a net loss, but it should offset the phantom income from the fee portion. A tax preparer who misses it can leave a worker paying tax on thousands of dollars that went directly from the employer to the attorney’s trust account.