FLSA’s Extended Limitations Period Requires Plausible Factual Pleadings, Second Circuit Holds
Because the plaintiff failed to allege any facts supporting his claim that his former employer acted willfully in failing to pay him overtime, he was not entitled to the FLSA’s extended, three-year statute of limitations. Therefore, as his claim was filed well after the standard two-year limitations period for such claims had expired, the trial court properly dismissed the claim. Whiteside v. Hover-Davis, Inc., 2021 U.S. App. LEXIS 12415 (2d Cir. Apr. 27, 2021). In so ruling, the Second Circuit resolved a split within its own district courts and joined with the Sixth Circuit Court of Appeals in an existing circuit court split with the Tenth Circuit. The Second Circuit has jurisdiction over federal courts in New York, Connecticut, and Vermont.
For many years, the plaintiff worked as an overtime-exempt Quality Engineer for the company. In 2012, he was asked to switch jobs to a Repair Organization Technician, a position the company classified as hourly and non-exempt. However, the plaintiff remained a salaried, exempt employee in this position until January 2016, when he returned to his Quality Engineer job. In June 2018, the plaintiff’s position was eliminated and his employment terminated.
In January 2019 – just shy of three years after last working as a Repair Organization Technician – the plaintiff filed suit against the company claiming, among other things, that the company violated the FLSA by failing to pay him overtime during the years he worked in that job. To get around the FLSA’s two-year statute of limitations, the plaintiff alleged that the company’s actions were willful and therefore his claims were timely under the three-year limitations period, applicable when an employer knowingly violates the FLSA or acts with reckless disregard as to whether its actions were unlawful. The trial court dismissed the plaintiff’s FLSA claim, concluding that the three-year statute of limitations was inapplicable because the plaintiff had failed to plead any facts supporting his allegation that the company’s actions were willful.
The Court of Appeals Decision
The plaintiff appealed, arguing that all he was required to do to avail himself of the extended limitations period was to plead willfulness itself, not facts supporting willfulness. Regardless, he added, he had asserted enough facts to support a plausible finding of willfulness. Affirming judgment for the employer, the Second Circuit concluded that to benefit from the three-year statute of limitations, a plaintiff must do more than simply allege willfulness in a conclusory manner. Rather, the plaintiff must provide “well-pleaded factual allegations” in his complaint, just as he must do with respect to the substantive claims themselves.
In reaching this conclusion, the Court of Appeals cited to the U.S. Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), which firmly established that courts should not accept as true those allegations in a judicial complaint amounting to “mere legal conclusions,” but instead should determine whether, if true, the “well-pleaded factual allegations . . . plausibly give rise to an entitlement of relief.” In the instant case, the plaintiff failed to sufficiently assert any such factual support for his contention that the company’s actions were willful. Notably, the plaintiff did not not allege that the company adjusted his salary to better align with the pay of the non-exempt employees in the position, nor did he ever complain to his managers or otherwise demonstrate that the company was “aware[ ] of [its] impropriety.” At most, concluded the Second Circuit, the plaintiff’s allegations suggested negligence on his employer’s part.
In so holding, the Second Circuit joined the Sixth Circuit Court of Appeals in concluding that to avail oneself of the three-year limitations period, a plaintiff must sufficiently allege facts, not mere conclusory assertions, that the defendant-employer’s actions were willful. Crugher v. Prelesnik, 761 F.3d 610 (6th Cir. 2014) (holding, in a case under the “structurally analogous” FMLA, that conclusory assertions of willfulness are not enough to invoke the three-year statute of limitations). By contrast, the Tenth Circuit has held that the “mere allegation of willfulness” suffices. Fernandez v. Clean House, LLC, 883 F.3d 1296 (10th Cir. 2018). In addition, the Second Circuit’s decision resolved a split among its own district courts.
Whether the U.S. Supreme Court will take up the issue and resolve the circuit split remains to be seen but, for the time being, the Second Circuit’s decision should be welcomed by employers in New York, Connecticut, and Vermont.