Tuesday, September 26, 2017

3d Circuit on "willful" FLSA violations

Wage and hour claims under the Fair Labor Standards Act (FLSA) generally have a two year statute of limitations - but, that gets bumped to three years for a "willful" violation. Obviously, the issue of whether a violation is "willful" is huge.

In Souryavong v. Lackawanna County, the Third Circuit issued a precedential opinion addressing the issue. The short version of the facts: Several employees worked in two distinct part-time capacities but the employer failed to aggregate their time to pay overtime when they worked more than a combined 40 hours in a workweek (doh!). They dub this the "two-job problem."

The employer found out about the problem in early 2011, but some violations continued into 2012 (notably the violations did not involve the actual plaintiffs in the case). 
The Supreme Court defines “willfulness” to include situations when the employer, at the time of its FLSA violation, either “knew” its conduct was prohibited by the FLSA or “showed reckless disregard for the matter.” McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988). Acting only “unreasonably” is insufficient—some degree of actual awareness is necessary.
The employer was generally aware of its FLSA obligations, but not specifically aware of the two-job problem. The Court held that a willful violation requires specific awareness of the actual violation, or "manipulation and concealment," or "ill will." Mere negligence is not enough. Simply being aware of the FLSA generally, and taking some time to correct the problem for non-party employees after the employer was made aware of the problem is not a willful violation.

The Court affirmed the trial court decision granting judgment as a matter of law, holding that there was no willful violation.