Defendants sometimes assert “equitable” defenses to legal claims brought against them. In some situations, courts have the discretion to bar claims by plaintiffs whose “unclean hands” or other actions make recovery manifestly unfair. According to a new decision from the Eleventh Circuit Court of Appeals, such equitable defenses are not available to employers that fail to pay employees overtime as required under the Fair Labor Standards Act.
In Bailey v. TitleMax of Ga., Inc., the plaintiff alleged that his supervisor told him not to record overtime hours worked, and altered his time records to reflect this direction. In response to the plaintiff’s claim for unpaid overtime, the employer claimed that he was barred from recovery because he had not followed company policy with regard to reporting the supervisor's misconduct. The district court agreed, dismissing the claim based on this equitable defense.
The Eleventh Circuit reversed this decision, remanding it for further proceedings. The court concluded that under the FLSA, the employer is vicariously liable for its supervisor’s misconduct. The Eleventh Circuit found no cases in the long history of the FLSA that allowed employers to escape liability for unpaid wages based on equitable defenses. According to the court, allowing such defenses would shift the burden of compliance with overtime laws to employees, who would be required to take affirmative internal steps to address non-payment before gaining the right to seek legal redress.
