In a victory for employers, the Second Circuit held that plaintiffs seeking to invoke the expansive three-year statute of limitations in the Fair Labor Standards Act (FLSA) must plead specific facts to support a claim that an employer willfully violated the law.

The FLSA statute has two limitations periods. In general, claims must be filed within two years of their occurrence. However, if an employee can show that the employer’s purported FLSA violations were willful – that the employer acted with reckless disregard for the law or was grossly negligent – the limitations period expands to three years.

In its April 27, 2021 decision in Whiteside v. Hover-Davis, Inc., Universal Instruments Corp., the Second Circuit addressed an issue of first impression: the pleading standard to take advantage of the FLSA’s three-year willfulness limitations period.

Background

Plaintiff Mark Whiteside initially worked for Hover-Davis as a Quality Engineer, an exempt position. However, in 2012, with Hover-Davis’s permission, Whiteside switched positions and, from January 2012 until January 2016, he performed the role of Repair Organization Technician, a non-exempt role. Although Whiteside regularly worked more than 40 hours per week as a Repair Organization Technician, Hover-Davis never paid him overtime. Whiteside switched back to the Quality Engineer role in January 2018. Two and one-half years later, he filed suit, alleging, among other things, that by failing to pay him overtime when he worked as a Repair Organization Technician, Hover-Davis willfully violated the FLSA.

The District Court dismissed Whiteside’s FLSA claim as time-barred after allowing him repeated opportunities to amend the complaint. The District Court held that because Whiteside waited two and one-half years to file the complaint, he was required to plead facts to plausibly allege that Hover-Davis willfully violated the FLSA. The District Court noted that Whiteside did not allege any facts to suggest that Hover-Davis acted with gross negligence or reckless disregard for the law. Whiteside appealed to the Second Circuit.

The Second Circuit Decision

In Whiteside, the Second Circuit confronted the issue of what a plaintiff must plead in a complaint to take advantage of the FLSA’s three-year statute of limitations provision for willfulness. District courts within the Second Circuit were divided on the issue. Some judges had held that general allegations of willfulness were sufficient. Others required plaintiffs to allege particularized facts demonstrating that the defendant acted with gross negligence or reckless disregard of the law in order for the three-year statute of limitations to apply.

The Second Circuit reviewed the FLSA’s legislative history and determined that willfulness is “an independent element” necessary to trigger the three-year statute of limitations exception under the FLSA. As such, a plaintiff asserting a three-year statute of limitations has the burden to plead and prove facts supporting this element. This contrasts with a statute of limitations defense to other claims where it is defendant’s burden to plead and prove an affirmative defense. For example, a plaintiff is not required to plead he or she is non-exempt because exemption is an affirmative defense under the FLSA for which the employer bears the burden of proof.

After finding that willfulness is an element of the claim, the Second Circuit applied Supreme Court precedent that a plaintiff must allege facts to support a plausible inference that the defendant willfully violated the FLSA, and that general allegations of willfulness will not suffice. In short, the Second Circuit held, “[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.”

Because Whiteside did not allege facts that support a plausible finding of willfulness, the Second Circuit upheld the District Court’s decision to dismiss the FLSA claim. In the complaint, Whiteside had alleged facts that merely indicated that Hover-Davis simply forgot to change Whiteside’s exemption status; while this might be negligence, it is not gross negligence necessary to meet willfulness. Indeed, Whiteside did not provide details about who assigned him different duties, whether anyone made any comments that would indicate knowledge of impropriety, or that he complained about his exempt status or salary. Whiteside merely pled that his employer failed to reclassify him when his duties changed. These allegations did not plausibly allege willfulness or reckless disregard.

The Whiteside decision creates a split between the Second Circuit and the Tenth Circuit, which only requires a plaintiff to plead general allegations of willfulness. Therefore, the issue may need to be resolved by the Supreme Court. Until the Supreme Court issues a contrary opinion, employers operating in the Second Circuit have another arrow in their quiver to fight the onslaught of FLSA claims being filed against them. Such employers can expect the court will require plaintiffs to plead willfulness with specific facts to support the allegations; without such particularization, the defendant-employer can move to dismiss the FLSA claim or at least narrow the time period at issue.

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