Tenth Circuit Holds That Employees Need Not Allege Specific Facts of Willfulness to Assert Older Wage Claims Under the Fair Labor Standards Act

    This month, the Tenth Circuit Court of Appeals (which hears appeals from federal courts in Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming) reinstated wage claims of two house cleaners under the Fair Labor Standards Act (“FLSA”), and rejected the argument that such claims were time-barred because they were more than two years old.[1]

Background

    Plaintiffs generally must bring FLSA claims (including claims by non-exempt employees for unpaid overtime) within two years of an alleged wage violation; however, employees have three years to sue based on a willful violation of the FLSA.[2] In Fernandez v. Clean House, LLC, the plaintiffs, who had stopped working as house cleaners for the defendant business more than two years before, claimed the business had misclassified them as independent contractors instead of employees, and sought overtime pay under the FLSA. The district court dismissed the wage claims as untimely under the FLSA’s general two-year limitations period, and held the plaintiffs had not sufficiently alleged a willful violation of the FLSA to permit application of the three-year statute of limitations for willful violations.

             The Tenth Circuit overturned the dismissal, holding that: (1) plaintiffs do not need to allege specific facts of willfulness to state a claim under the FLSA, because willfulness is relevant only to the statute-of-limitations defense[3]—not to the merits of an FLSA claim; and (2) in any event, the plaintiffs sufficiently alleged willfulness because the company was small and “Defendants would have knowledge of the conduct that allegedly violated the FLSA.” As a result of the decision, the plaintiffs are permitted to proceed on their more-than-two-year-old wage claims.[4]

Practical Takeaways

     We expect the Fernandez decision will cause some plaintiffs in Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming to sue based on older wage claims (i.e., claims between 2 and 3 years old). Although plaintiffs ultimately must prove willfulness, they need not specifically allege willfulness. As a result, it will be harder for employers to dismiss such older claims off the bat.

    The Fernandez decision does not affect the FLSA’s substantive requirements. To minimize exposure to FLSA claims, employers should assess the proper classification of employees and independent contractors, as well as exempt and non-exempt employees.

Footnotes

[1] Fernandez v. Clean House, LLC, 883 F.3d 1296 (10th Cir. 2018).

[2] 29 U.S.C. § 255(a).

[3] The court in Fernandez reasoned that a defendant has the burden to plead an affirmative defense in response to a pleading and that a plaintiff need not anticipate in the complaint an affirmative defense by a defendant. Fernandez, 883 F.3d at 1296.

[4] Although the Tenth Circuit overruled the dismissal of plaintiff’s claims, the defendants in Fernandez will still have an opportunity to prove the alleged wage violations were not willful, and may move for summary judgment on the issue of willfulness. See Fernandez, 883 F.3d at 1296 (“The defendant’s first line of defense [with regard to affirmative defenses] is ordinarily summary judgment”).

 

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