Plaintiff lawyers are always asserting that every single alleged wage hour violation is “willful” so when they start negotiating a settlement (or trying to) they always start from that position, i.e. an extra year of liability. I think that shows either a fundamental misapprehension of the doctrine of willfulness or they are just being typical plaintiff lawyers. It is always encouraging to see a case where this willfulness allegation is rejected by a court because saying something is “willful” simply does not make it so. The case is entitled Carrera v. EMD Sales Inc. and issued from the Fourth Circuit Court of Appeals.
In a published opinion, the Court ruled that although the Company had misclassified individuals as exempt, because they were not “outside salesmen,” it was not done willfully. The Court observed that “a finding that a defendant did not act willfully in violating the FLSA might support a determination that the defendant acted reasonably and in good faith … and, of course, the opposite is also true. But the two need not go hand in hand.”
The district court Judge awarded the plaintiffs more than $300,000 in overtime pay and damages but found the Company’s action were not willful. The appellate court did not find these rulings to be “clearly erroneous” and thus would not be disturbed. The appellate court credited the Judge’s conclusion that the CEO’s testimony convinced him that “her failure to inform herself was negligent, but it did not amount to reckless or willful misbehavior.”
The Fourth Circuit also found the decision regarding the exemption issue was proper, explaining that “there is ample evidence in the record to support the court’s finding that the defendants had only an ‘aspirational’ and not a ‘concrete’ sense of what their sales representatives did and, specifically, their ability to make sales at chain stores.”
The test for willfulness is whether there was knowledge by the employer that the compensation practice was illegal or dubious and an intentional disregard of that knowledge or turning a blind eye. When an employer “simply” misclassifies employees after having done some research or analysis of the positions involved, that is not “willfulness” under the FLSA. Will plaintiff lawyers ever learn that?
Frankly, I doubt it…