In a recent case before the U.S. District Court for the Southern District of Mississippi, an employer was reminded that lawsuits brought under the Fair Labor Standards Act (FLSA) can be especially costly because they often involve claims asserted by numerous employees.
Had the employer complied with the simple notice-posting requirement of the FLSA, it probably could have gotten two former employees’ wage and hour claims dismissed within a few short months without having to pay them a dime.
However, because it failed to comply with the posting requirements, the employer must now engage in discovery (pretrial fact-finding), after which there is no guarantee that the employees’ otherwise untimely claims will be dismissed. That oversight could prove costly for the employer. Be sure you don’t make the same mistake!
“Gary” and “Lindsay” were employed by Defenders, Inc., until the end of 2013. In March 2017, Gary filed suit against Defenders, contending that it failed to pay him and others overtime in accordance with the FLSA. Lindsay joined the action as a plaintiff on August 29, 2017.
Defenders asked the court to dismissal Gary and Lindsay’s claims because they were untimely and were therefore barred by the applicable statute of limitations. Generally, claims can be dismissed at an early stage of the litigation if there are no material facts in dispute and a judgment on the merits could be rendered based on the pleadings in the complaint.
According to the court, early dismissal of claims is meant to prevent litigants from having to go through the “full and elaborate process of trial of issues when there is a dominating legal principle governing liability which is dispositive of the case without the necessity of trial.”
An employee must file a lawsuit or consent to join a lawsuit for unpaid overtime under the FLSA within 2 years of the violation or, for allegedly willful violations, within 3 years of the alleged violation. An FLSA claim accrues on each regular payday immediately following the period during which the work was performed and for which the overtime is being claimed.
Gary and Lindsay both admitted that their employment with Defenders ended in late 2013, and it was undisputed that neither former employee filed his respective claims within 3 years of the end of his employment at Defenders. However, both Gary and Lindsay alleged that their claims were not untimely based on the theory of “equitable tolling.”
Relying on the FLSA’s requirement that employers must display an official poster outlining the Act’s provisions, the former employees asserted that the statute of limitations period must be tolled (or suspended) until the date that Defenders finally began complying with the FLSA’s posting requirement. It’s believed that Defenders didn’t comply with that requirement until 2016. Thus, Gary and Lindsay claimed they had until 2019 to file their claims.
Defenders argued that Gary and Lindsay couldn’t raise equitable tolling at this stage of the litigation because they didn’t plead it in their complaint. The court disagreed, finding the former employees weren’t required to allege equitable tolling as an element of their claim.
The court then noted that the doctrine of equitable tolling “is read into every federal statute of limitation[s],” and the statute of limitations should be suspended if an employee was “excusably unaware of the existence of his cause of action” or if his injury was “inherently unknowable.” Therefore, the question became whether Gary and Lindsay were reasonably unaware during the relevant pay periods that they were being underpaid by Defenders.
The court concluded that such an inquiry is “fact-sensitive” and there is insufficient evidence “at this time” to determine whether Gary and Lindsay were entitled to equitable tolling of their claims. “Whether tolling applies is a highly factual issue that depends on what and when [an employee] knew or should have known—an inquiry that is simply impossible to conduct without further development of the record,” said the court.
Accordingly, the court ruled that Gary and Lindsay should have an opportunity to show that their claims were not time-barred. The parties must therefore conduct discovery on the equitable tolling issue.
Several federal and state laws, including the FLSA, include posting requirements. Your failure to comply with those requirements may not only subject your organization to penalties but may also preclude you from having any untimely claims dismissed at the outset of a lawsuit.
Given the relative ease with which notices can be posted and the lack of expense associated with displaying such posters, we strongly encourage you to ensure that you are compliant with all applicable federal and state posting requirements.