Author Archive: Michael Billok

Dismissing Non-Willful Claims Under the FLSA – the Second Circuit Rules on an Issue of First Impression

Everybody knows that the statute of limitations for claims under the Fair Labor Standards Act (FLSA) is two years, unless the claim is for a willful FLSA violation, in which case the statute of limitations is three years. Okay, maybe everybody doesn’t know that—but attorneys who regularly bring or defend wage-and-hour claims certainly do (and if you’re reading this blog, you probably do as well). So an FLSA claim filed in 2021 based on allegations from 2017 can be easily dismissed at the outset of litigation, because such a claim is clearly beyond the longest possible statute of limitations of three years. Now, consider this: what if a plaintiff files a claim in May 2021, alleging an FLSA violation from June 2018? In that case, the only way the plaintiff can bring a valid FLSA claim is if the claim is willful, because then the plaintiff could utilize the three-year statute of limitations. But this raises two questions for the court:

  1. Can the court even consider an employer’s motion to dismiss a plaintiff’s FLSA claim on the basis that the plaintiff has not sufficiently pled willfulness?
  2. If the court can consider such a motion to dismiss, what standard do the plaintiff’s allegations have to meet in order to survive?

Believe it or not, before April 27, 2021, the Second Circuit had not definitively considered either question, and indeed is only the second Court of Appeals to do so.

On a motion to dismiss in federal court, the judge generally cannot consider any information outside of the plaintiff’s complaint. There are some exceptions, such as if the plaintiff submits documents with the complaint, or if the complaint cites specific documents. Likewise, the judge also must generally consider allegations to be true when deciding a motion to dismiss, but there are limits to this rule as well. The judge is not required to accept conclusory allegations, such as those that merely parrot legal elements or conclusions without providing factual support (e.g. “the defendant violated the FLSA”). And of the remaining, non-conclusory allegations, the judge’s task is to determine whether those allegations state a plausible claim of relief—not just that the plaintiff prevailing is possible, no matter how remote the possibility, but that if the plaintiff’s allegations are true, it is reasonable to conclude that a legal violation occurred.

And now we introduce FLSA claims into this mix. A plaintiff alleging that an FLSA claim was willful has the burden to prove willfulness—and yet if an employer raises the issue of the statute of limitations, that is an affirmative defense, and therefore the employer’s burden to prove. So on a motion to dismiss a willful FLSA claim, does a plaintiff have to show that he or she plausibly alleged willfulness, or (1) should the court not even consider the issue because it’s an issue of a statute of limitations defense, and (2) even if it does consider the issue, does a plaintiff have to allege willfulness with plausibility?

In the case of Whiteside v. Hover-Davis, the plaintiff argued that the court could not consider the issue, because the employer was raising an affirmative statute of limitations defense; that if the court could consider the issue, a plaintiff could just merely allege willfulness without pleading it plausibly; and, even if the court required pleading willfulness plausibly, the plaintiff had done so. In contrast, the employer argued that both the legislative history and Supreme Court jurisprudence of the FLSA demonstrated that the statute of limitations for FLSA claims was two years, with the limited exception of three years for willfulness. As a result, if a claim on the face of the complaint was outside the two-year window, the court could consider the issue on a motion to dismiss because willfulness was the plaintiff’s pleading burden, and because it was plaintiff’s pleading burden, it must be plead with plausibility. And finally, that the plaintiff in Whiteside had not plead willfulness with plausibility.

In a 2-1 decision, the Second Circuit held for the employer, upholding the dismissal of the plaintiff’s claim. In her opinion, Chief Judge Livingston cited the Supreme Court’s decision in McLaughlin v. Richland Shoe, 486 U.S. 128 (1988), stating that Congress intended to create a “significant distinction between ordinary violations and willful violations” of the FLSA (emphasis in original). As a result, not only can a court consider such claims on a motion to dismiss, but such claims must be pled with plausibility, not generally. (The Second Circuit stated that the other Court of Appeals to consider the question, the Tenth Circuit, had incorrectly found that the mere allegation of willfulness is sufficient for the three-year statute of limitations to apply.) The court went on to find that the plaintiff—who alleged that he had done non-exempt tasks for a number of years, but had not alleged that he had ever complained to a supervisor, and had not alleged that the employer had ever changed his salary or said anything to him that suggested any awareness of wrongdoing—had not made a plausible allegation of willfulness, and thus could not utilize the three-year statute of limitations. While Judge Chin dissented, he did not opine on the court’s ruling that willful FLSA claims must be plausibly pled; he only argued that he found the plaintiff’s allegations of willfulness to be plausible.
In short, in the Second Circuit, it is now settled that claims of willful FLSA violations must plead willfulness plausibility to enjoy a three-year statute of limitations on a motion to dismiss.

Michael D. Billok authored this article, and represented Hover-Davis in Whiteside v. Hover-Davis. He is a member (partner) in the Labor & Employment practice at Bond, Schoeneck & King, PLLC, and a member of the Wage & Hour Defense Institute, an organization of attorneys who represent employers in wage and hour matters.


We Accidentally Overpaid an Employee—We Can Just Take It Out of the Next Paycheck, Right?

It seems that common sense would dictate that if an employee receives a windfall of unearned and unexpected money, that an employer could recover that amount from the employee’s next paycheck.  But as those familiar with legal issues know, the law and common sense do not always overlap.  And unfortunately, a number of employers are unaware of restrictions that various states have put in effect regarding deductions from paychecks generally, as well as deductions from paychecks for overpayments and advances.

Take New York, which has some of the most stringent restrictions on paycheck deductions in the country.  If you overpay an employee, you may be able to recover the money by payroll deduction—it’s not automatic.  For example:

  • You must notify the employee within eight weeks of the overpayment about your intent to deduct the overpayment.  If you discover the overpayment more than eight weeks later—sorry.  You’re out of luck.
  • If the overpayment is less than an employee’s net wages in the employee’s next paycheck, you can deduct the total amount from the employee’s next paycheck, but you have to give at least three days’ notice before the payment is due.
  • If the overpayment exceeds the employee’s net wages in the employee’s next paycheck, then it will take some time and effort to get it back: (1) you have to inform employees three weeks before the first deduction, (2) the deduction cannot exceed 12.5% of the gross wages for that wage payment, and (3) the deduction cannot reduce the employee’s effective hourly rate below the state minimum.  That means that the earliest you can recover a large overpayment amount through payroll deductions is eight pay periods—and if you have an employee at or near the minimum wage, it could take years to recover the overpayment through payroll deduction.

And that’s just overpayments.  New York has likewise enacted laws and regulations regarding making advances to employees that are so onerous, few employers opt to provide such advances—unfortunately, to the detriment of employees. Bottom line, anytime you are considering making a deduction from employee’s pay, whether for overpayments, advances, or other money that may be owed to you by the employee, it is highly advisable to check your state-specific requirements.