What is the FLSA Statute of Limitations -- 2 Years; 3 Years; More?

The Universe is nothing but an infinite and complex mechanism. Its complexity is so great it borders on willfulness, suddenness and randomness; it gives the illusion of free will possessed by conscious beings.

-- Konstantin Tsiolkovsky

In general, a violation of the Fair Labor Standards Act (“FLSA”) is accompanied by a two-year statute of limitations; this term increases to three years if it is determined that the employer “willfully” violated the FLSA. 29 U.S.C. §255(a). The courts have debated the implementation of the willfulness standard and many attributed different meanings. This all culminated in a Supreme Court case that discussed three possible definitions.

The original legal test was called the “Jiffy June” standard which came from the case Coleman v. Jiffy June Farms Inc. This set the willfulness standard at a low bar of whether the employer knew that the FLSA was “in the picture”. If an employer was aware that its employees may be covered by the FLSA, then it could be found to have willfully violated the Act.

The modern standard abandons Jiffy June, and instead requires a much higher level of proof --  the modern test is whether the employer “knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute…” Mclaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988).

The Richland Shoe court rejected a third proposed standard that would make the analysis revolve around whether the defendant sought advice from counsel over the matter. This was rejected because it did not comply with the plain meaning of the statute and because it was too similar to mere negligence. The Supreme Court decided to adopt the “knew or reckless disregard” test because the Jiffy June standard was found to insufficiently distinguish between willful and non-willful violations. In other words, the Supreme Court was concerned that employers who had not violated the FLSA willfully in the traditional sense would be unjustly subject to a three-year statute of limitations.

The willfulness standard is often associated with the “good-faith” standard in awarding liquidated damages. But the two standards have some different nuances, including varying burdens of proof.  Kearns, et al., Fair Labor Standards Act, 3d ed., ch. 16-146 (Bloomberg 2015). While the two tests often run in tandem, it is possible to not be willful (and thus responsible for only two years of back wages), yet to find the employer subject to double damages.

And last, the FLSA limitation period may be tolled, because of some employer bad act, like not posting the DOL required FLSA poster at the work site, or otherwise behaving inequitably. But that is for another blog on another day.

Nonetheless, as a result of the willfulness standard set out in Richland Shoe, no doubt fewer employers have been subject to a three-year statute of limitations. This limits the amount of back wages and possible liquidated damages awarded to plaintiffs in cases in which the willfulness standard is not satisfied.