Important case for pleading willfulness under the Fair Labor Standards Act

If you handle wage and hour claims under the Fair Labor Standards Act, then you know this, but for everyone else, the statute of limitations in FLSA claims is two years for unpaid wages and lost overtime pay. But that two-year deadline is extended to three years if the FLSA violation is willful. My guess is that most FLSA plaintiffs believe the failure to pay wages is almost always willful, and that the three-year SOL applies. That may be true, but the question in this case is how do you plead willfulness? The Court of Appeals, in a split decision, rules against the plaintiff, holding he did not plausibly plead willfulness.

The case is Whiteside v. Hover-Davis, Inc., issued on April 27. Plaintiff was a Quality Engineer for a company that manufactured automation assembly equipment; that was a salaried position. He eventually took on the duties of a Repair Technician. The employee who had previously held the Repair Technician position was classified as non-exempt, which meant he was getting overtime pay. But when plaintiff took on that position, he was still classified as exempt from the FLSA's overtime requirements and still treated as a salaried employee; no overtime for plaintiff. Plaintiff alleges the failure to pay him overtime wages was willful and that the three-year SOL applied. He needs that three-year SOL to maintain the lawsuit, since he filed the case after the two-year SOL had expired. In order to keep the case moving, plaintiff has to convince the Court of Appeals that he has properly plead willfulness.

The Court of Appeals notes that some Circuits allow the plaintiff to allege willfulness by merely alleging it in the complaint. Other Circuits want you to provide more detail. The Second Circuit (Livingston and Englemayer [D.J.]) says the plaintiff must provide detail, consistent with the plausibility pleading requirements under Iqbal and Twombly, which changed the rules on federal pleading over ten years ago. Conclusory allegations will not cut it under Twickbal. The Court notes that when Congress enacted the FLSA, it intended to draw a "significant distinction between ordinary violations and willful violations" of the statute. It is not enough to show that "an employer knew that the FLSA was in the picture" to prove willfulness. Instead, the plaintiff must show "the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited by statute." Cases further hold that plaintiffs must plead the elements of certain exceptions to the statute of limitations. 

Bottom line: "the mere allegation of willfulness is insufficient to allow an FLSA plaintiff to obtain the benefit of the three-year exception at the pleadings stage. Rather, the plaintiff must allege facts that permit a plausible inference that the defendant willfully violated the FLSA for that exception to apply."

Under this new pleading rule, plaintiff loses because the Court will not infer willfulness "from the mere fact that he was asked for a period of time to perform job responsibilities typically performed by non-exempt employees even though he was classified as exempt." The Court goes on to reason:

Whiteside does not allege that Defendants adjusted his salary to reflect that of a non-exempt employee. Nor, as the district court noted, does he allege that he ever complained about the situation to his managers. Similarly, Whiteside fails to allege any details about who asked him to change roles or whether that manager, or any other manager, said anything to him suggesting an awareness of impropriety—details that would have plainly been within his knowledge and that he could have included in any of his four complaints. Cf. Parada v. Banco Indus. De Venezuela, C.A., 753 F.3d 62, 71 (2d Cir. 2014) (finding that summary judgment was proper as to the question of willfulness under the FLSA because the plaintiff "failed to adduce any evidence regarding how the misclassification occurred"). Indeed, Whiteside fails to allege that his managers acted in any manner suggesting an awareness that their actions violated or could violate the FLSA.

Instead, the complaint only suggests that defendant had negligently failed to reclassify plaintiff as a non-exempt employee who would have been entitled to overtime pay. 

Judge Chin dissents, stating that plaintiff plausibly alleges willfulness because the complaint states that 

Defendants classified Repair Organization Technicians as non-exempt employees eligible for overtime pay. Whiteside was scheduled to work 45 hours per week and often worked beyond his scheduled hours. And yet, he did not receive overtime pay. He alleges that defendants' failure to pay him overtime was willful because "[d]efendants, with reckless disregard as to whether their conduct was prohibited under statute, failed to pay the statutorily required overtime rate for the hours" he worked in excess of 40 hours per week.