By: Robert Whitman and Bill Varade

Seyfarth Synopsis: In Whiteside v. Hover-Davis, Inc., the Second Circuit upheld the dismissal of an FLSA claim because the plaintiff failed to allege facts sufficient to invoke the three-year limitations period for willful violations.

If a plaintiff merely alleges a willful violation of the Fair Labor Standards Act (“FLSA”), without more, will that suffice to invoke the FLSA’s three-year statute of limitations for willful violations?  The Second Circuit said “No” when it recently affirmed a district court’s dismissal of a plaintiff’s overtime violation claim.

The case was not without controversy, though, as the court had to navigate a circuit split on this issue, and a split between the districts courts within the Second Circuit.  Further, the opinion generated a forceful dissent, which suggests this matter, although settled in the Circuit, may rise again at the Supreme Court one day.

Case Background

The plaintiff, Mark Whiteside, worked for years at Hover-Davis as a Quality Engineer, a salaried, non-exempt position.  In January 2012, an unnamed manager asked Whiteside to switch to Repair Organization Technician, an hourly, non-exempt position.  Whiteside regularly worked 45-50 hours at his new position, but never received overtime pay.  However, his salary remained the same as before this change.

Whiteside was terminated in 2018 when Hover-Davis ceased manufacturing the product he worked on.  He then commenced suit, alleging, among other claims, that he was not paid overtime wages from January 2012 to January 2016 in violation of the FLSA.

Although his claim fell outside the FLSA’s two-year limitations period, Whiteside tried to save his untimely claim by alleging that the company’s violation was willful, and that he should benefit from the FLSA’s three-year statute of limitations for willful violations.  However, the district court disagreed, dismissing his claim because (1) his claim was untimely under the FLSA’s two-year statute of limitations, and (2) he failed to allege facts raising an inference of a willful violation.

The Second Circuit Affirms

To resolve this pleading issue, the Second Circuit considered two previously laid paths.  Both the Tenth and Sixth Circuits had encountered this issue before, but came to opposite conclusions.

The Tenth Circuit allows a plaintiff to merely allege a willful violation in order to benefit from the longer statute of limitations.  The Sixth Circuit, however, requires that a plaintiff plead facts raising a plausible inference that a willful violation has occurred.  Further, the district courts within the Second Circuit disagreed on the proper approach, with some judges following the Tenth Circuit’s approach and others following the Sixth’s.

Ultimately, the Second Circuit followed the Sixth Circuit, holding that “willfulness operates as an independent element of claims for willful violations of the FLSA,” because such claims subject an employer to heightened liability.  “[R]equiring FLSA plaintiffs plausibly to plead willfulness” upholds the distinction between ordinary and willful violations of the FLSA.  Thus, it was “incumbent on the plaintiff to plead facts that make entitlement to the willfulness exception plausible.”

Here, willfulness could not be inferred from the fact that Whiteside was asked “to perform job responsibilities typically performed by non-exempt employees even though he was classified as exempt.”  Furthermore, he failed to allege any details “suggesting an awareness of impropriety” on behalf of defendant or any of defendant’s managers.  So, the Second Circuit said he had failed to allege sufficient facts to benefit from the FLSA’s longer statute of limitations for willful violations.

Dissent And Circuit Split Suggest This Issue May Rise Again

This reasoning found support from only two of the three judges on the panel, and generated a forceful dissent by Judge Denny Chin.

Judge Chin argued that at the motion to dismiss stage, a plaintiff need only “plausibly allege” a willful violation occurred.  Here, he said, Whiteside had done just that by alleging: (1) he was assigned to a non-exempt role; (2) his supervisor and manager knew he performed this role for years; (3) he regularly worked over 40 hours a week; and (4) he was never paid overtime.  This, Judge Chin said, could “support the inference that defendants were aware of their obligation to pay him overtime and . . . either intentionally or recklessly failed to do so.”

While the dissent’s reasoning failed to carry the day, it suggests that this issue remains controversial.  Considering the current Circuit split, this issue could very well see review by the Supreme Court in the near future, perhaps in this very case.  But as it currently stands in the Second Circuit, the burden lies on “the plaintiff to plead facts that make entitlement to the willfulness exception [of the FLSA] plausible.”