Every time a plaintiff files a FLSA lawsuit, they seek a third year, one longer than the usual two year statute of limitations, claiming that the violations were “willful.”  It has become a matter of course and defendant attorneys must begin any settlement negotiations knowing that the amount claimed has been artificially inflated with a third year claim.  Maybe things are changing.  The Court of Appeals for the 2nd Circuit has now ruled that plaintiffs seeking to invoke the enhanced three-year statute of limitations) must plead specific facts to show that the employer willfully violated the law.  The case is entitled Whiteside v. Hover-Davis, Inc., Universal Instruments Corp., and issued from the Second Circuit Court of Appeals.

The standard for that third year is a showing of “reckless disregard” by the employer for the dictates of the FLSA.  In this case the plaintiff filed his suit more than two years after the events giving rise to it e.g. alleged claim of failure to pay overtime), but the lower federal court dismissed the allegations as time-barred because the plaintiff had to plausibly allege that there was a willful violation of the statute.  There were no facts alleged to indicate that the Company had acted with with gross negligence or reckless disregard for the law.

The Court opined, from a scrutiny of the legislative history, that willfulness was “an independent element” necessary to sustain a three-year statute of limitations.  Thus, the plaintiff had to plead and prove the facts that support this serious allegation.  This view diverges with presentation of an “ordinary” statute of limitations defense to other claims where the defendant’ must plead/prove this affirmative defense.

The Court first decided that willfulness was an element of the claim and then relied on Supreme Court precedent for the proposition that a plaintiff must allege facts that undergird a plausible inference that a willful violation has been committed.  In other words, boilerplate allegations of willfulness, without details, are insufficient. As the Court explained, “[w]hen a plaintiff relies on a theory of willfulness to save an FLSA claim that otherwise appears untimely on its face, it should similarly be incumbent on the plaintiff to plead facts that make entitlement to the willfulness exception plausible.”

The plaintiff here failed to do this.  He only alleged facts to suggest that the Company “forgot” to change his exempt status.  That might show negligence, but not the gross negligence needed to rise to the level of “willfulness.”  He did not allege that any one said anything to indicate management knew it was wrong or, more importantly, that he ever complained about this issue (i.e. exempt status).  He only asserted that his employer failed to reclassify him when his duties changed and that was not enough for willfulness or reckless disregard.

The Takeaway

I know that this case is precedential for the Second Circuit States (e.g. NY, Conn) but I say the rationale of this case should be utilized by defense practitioners early on in the case if at all possible.  There is a split in the Circuits on this discrete issue and the US Supreme Court may ultimately have to harmonize the law.  Until then, this is a tactic that should be aggressively used.

If successful, the entire complexion of the litigation changes…