Professional Service Agreement

Third Circuit Addresses Willful Violations of FLSA

October 02, 2017

Under the Fair Labor Standards Act (FLSA), which governs wage and hour issues such as minimum wage and overtime pay, the statute of limitations is generally two years. The FLSA, however, sets the limitations period for “willful” violations at three years. In a recent decision by the U.S. Court of Appeals for the Third Circuit, the Court defined what constitutes a “willful” violation of the FLSA.

In Souryavong v. Lackawanna County, the plaintiffs worked for the county in two separate part-time capacities. The county tracked and paid these employees for each of their individual jobs, but later realized that it had not aggregated the hours in both jobs, resulting in unpaid overtime for weeks where an employee worked more than 40 hours combined.

At trial, the county did not dispute that it violated the FLSA by failing to pay overtime, but did dispute that this violation was “willful.” In an effort to show “willfulness,” the plaintiffs introduced evidence that the county generally understood its overtime obligations as well as an e-mail among county officials with a subject line of “county wage and hour issues.” The trial court ultimately sided with the county, and the plaintiffs appealed.

The Third Circuit affirmed the district court, finding that the plaintiffs’ evidence was insufficient to establish a “willful” violation. The court noted that although the county was generally aware of its obligations under the FLSA, it was not specifically aware of the aggregation issue involving the plaintiffs. The court held that a “willful” violation entails situations when an employer, at the time of a FLSA violation, either “knew” that its conduct was illegal or showed “reckless disregard.” It continued that acting “unreasonably” is not enough—“some degree of actual awareness” and a “degree of egregiousness” is necessary.

This decision emphasizes the importance of ensuring that policies and practices regarding timekeeping and compensation are correct so as to avoid a finding of “reckless disregard” and, in turn, “willfulness.”