DOL Proposes Regulations Implementing $15 Per Hour Federal Contractor Minimum Wage Executive Order

On April 27, 2021, President Biden issued Executive Order 14026, raising to $15 per hour — with increases to be published annually — the minimum wage certain federal contractors must pay workers performing work “on or in connection with” a covered Federal contract or subcontract. The types of contracts impacted include those covered by the Service Contract Act, the Davis-Bacon Act, certain concession contracts, and certain contracts related to federal property and the offering of services the general public, federal employees and their dependents. The current minimum wage is $10.95 per hour, established by Executive Order 13658 during the Obama Administration.

On July 21, 2021, the Department of Labor (“DOL”) announced the much anticipated Notice of Proposed Rule Making (“NPRM”) detailing the proposed regulations to implement the new minimum wage requirements. The NPRM is scheduled to be published in the Federal Register on July 22, 2021, with the new requirements intended to be effective January 30, 2022. However, contracting agencies are encouraged to implement the new minimum wage requirements in existing contracts.

While the NPRM is substantially similar in key areas to the final regulations implementing Executive Order 13658, it is notably more expansive in critical areas, including coverage of “new contracts,” expanded coverage of geographic areas, and limitations on exclusions of tipped subminimum wage workers.  Most importantly, the NPRM proposes coverage of the same types of contracts as those covered by Executive Order 13658, but for the most part all such contracts likely will be subject to coverage on or after January 30, 2022, including those never covered by Executive Order 13658 requirements.

For more information about the NPRM, and what contractors should do now to prepare, please see our client alert here: Proposed Regulations Implementing $15 Hourly Federal Contractor Minimum Wage Executive Order

In-flight Meal Periods for Security Officers Were Not Compensable, Fifth Circuit Holds

A security company did not violate the Fair Labor Standards Act (FLSA) when, under its meal-period policy, it automatically deducted an hour of pay from its security officers on certain flights, the Fifth Circuit Court of Appeals has held. Dean v. Akal Security, Inc., 2021 U.S. App. LEXIS 18621 (5th Cir. June 22, 2021). The Fifth Circuit has jurisdiction over the federal courts in Louisiana, Mississippi, and Texas.

Prior to late December 2017, Akal Security had a contract with the U.S. Immigration and Customs Enforcement agency (“ICE”) to provide security and control of deportees on certain domestic and international flights. These services were undertaken by Aviation Security Officers (ASOs), who were classified as non-exempt hourly employees under the FLSA. On certain return flights for these missions, Akal’s policy provided for a mandatory, unpaid, one-hour meal period on each shift. However, if there were still detainees onboard or if the flight was less than 90 minutes long, the ASOs would be paid for the entire trip without a meal-period deduction.

A group of ASOs filed suit in Louisiana federal court, alleging that the meal periods were not bona fide – and therefore were compensable – under the FLSA. As a result, contended these employees, they were owed additional minimum wages and overtime compensation based on the time deducted for the meal periods. The employees subsequently dismissed their minimum wage claims but pressed forward with their overtime claims. The trial court granted summary judgment to the company and the employees appealed.

In affirming summary judgment for the company, the Fifth Circuit began its analysis with “this simple regulatory sentence: ‘Bona fide meal periods are not worktime.’” The Court of Appeals then applied the “predominant benefit” test to determine if the meal periods provided by Akal were bona fide. The first and second factors of that test ask whether the employees are “subject to real limitations on their personal freedom which inure to the benefit of the employer” or other restrictions on the “employee’s activities.” The ASOs argued that they were subject to multiple limitations and restrictions, including not being able to leave the plane, visit a doctor, go to place of worship, eat at a restaurant, make a phone call, or use the internet. The Fifth Circuit noted, however, that “the effect of any limitations on the ASOs’ activities imposed…must be analyzed in the context of the relevant workplace,” recognizing that the law does not require an employee be allowed to leave the workplace during an unpaid meal period. Moreover, the restrictions complained about by the ASOs are “inherent to working on an airplane.” Thus, these restrictions “do not inure to Akal’s benefit” and “do not undercut the validity of the meal break.”

The remaining factors of the predominant-benefit test ask whether during the meal period the employee remains responsible for “substantial work-related duties” and how frequently the period is interrupted by the employer. In this case, the record established that “the ASOs almost always had at least one hour on the return flight when they had no work-related duties” and that their meal periods were not frequently interrupted. Thus, the meal periods predominantly were to the benefit of the employees and were bona fide.

The Court of Appeals also rejected the employees’ argument that they should be compensated for the meal periods because they did not necessarily eat a meal and because the breaks were not “regularly scheduled.” First, the Fifth Circuit found no requirement in the FLSA that employees consume food for a meal period to be deemed bona fide. Moreover, language from a prior case referring to “regularly scheduled” meals was an explanation of a party’s argument in that case, not a statement that the law requires meal periods to occur at predictable or preset times. Finally, the Court of Appeals concluded that Akal’s failure to record the precise times the meal periods were taken did not, in and of itself, create a violation of the FLSA.

In upholding the company’s meal-period policy, the Fifth Circuit joins the Ninth Circuit Court of Appeals, which upheld the same policy in an opinion issued last year. Alonzo v. Akal Security Inc., 807 Fed. Appx. 718 (9th Cir. 2020). A similar case from a Florida district court remains pending on appeal to the Eleventh Circuit.

If you have any questions about this decision, meal period policies, or any other wage and hour issue, please contact a Jackson Lewis attorney.

Bonuses Prompted by Federal Tax Reform and Pay for Charitable Volunteer Time Were Properly Excluded From Employees’ Overtime Calculation, Fourth Circuit Holds

Affirming the dismissal of wage and hour claims against “big box” retailer Lowe’s, the Fourth Circuit Court of Appeals agreed that company bonuses, provided to employees following 2018 revisions to federal tax law, were rightly excluded from the “regular rate” used to calculate overtime compensation under the Fair Labor Standards Act (FLSA). The Fourth Circuit further agreed that paid leave provided to employees for time spent on voluntary charitable activities likewise was properly excluded from the regular rate calculation. McPhee v. Lowe’s Home Centers, 2021 U.S. App. LEXIS 18076 (4th Cir. June 17, 2021). The Fourth Circuit has jurisdiction over the federal courts in Maryland, North Carolina, South Carolina, Virginia, and West Virginia.

Generally, the FLSA requires that employers compensate their employees who work in excess of forty hours per week at a rate one and a half times the regular rate at which they are employed. Under the Act, the regular rate “include(s) all remuneration for employment paid to, or on behalf of, the employee,” with some specifically listed exceptions. One such exception is discretionary bonuses, that is, bonuses for which “the employer [] retain[s] discretion both as to the fact of payment and as to the amount until a time quite close to the end of the period for which the bonus is paid.” Another exception is “sums paid as gifts; payments in the nature of gifts made at Christmas time or on other special occasions, as a reward for service, the amounts of which are not measured by or dependent on hours worked, production, or efficiency.” 29 U.S.C. §§ 207(e)(1) & (3).

Beginning in 2016, Lowe’s implemented the “Give Back Time” policy, under which eligible employees are paid at 100% of their hourly base rate of pay for up to eight annual hours of time volunteering with the charitable organization(s) of their choice. That policy expressly provides that the time will not be used in calculating overtime hours. Participation in the program is strictly voluntary and while the company does impose some limitations on eligible charities, it does not require that employees volunteer for any specific charity.

Additionally, in early 2018 Lowe’s announced that, as a result of federal tax reforms (i.e., the Tax Cuts and Jobs Act of 2017), it would pay each of its employees a bonus, ranging from $75 to $1000 and depending solely on full-time or part-time status and years of service. Those bonuses were paid in mid-February 2018, approximately two weeks after the bonus announcement was first made, and were not included in the regular rate calculation for the pay period in which they were made. Several employees filed suit, claiming that Lowe’s improperly excluded from the regular rate calculation – and therefore from their overtime pay – both the compensation provided under the Give Back Time policy and for the February 2018 bonuses. The district court dismissed the claims, the employees appealed, and the Fourth Circuit affirmed the dismissal.

First, the Court of Appeals concluded that the tax-reform bonuses properly were excluded as either gifts or discretionary bonuses. The bonuses were given in honor of a special occasion, were not made pursuant to a contract or other agreement, were not based upon the hours or wages of the employees, and were not so substantial as to have been relied upon by the employees. On the contrary, the only basis for an employee’s bonus were years of service and status as either full- or part-time. The Court rejected the argument that the bonuses were non-discretionary retention bonuses, given the brief (two-week) period between the announcement of the bonuses and their payment and the lack of any allegation that a particular reason existed to retain employees during this time. The Fourth Circuit likewise rejected the employees’ contention that the tax reform wasn’t a “special” occasion, adding that the law does not in fact even require there to be such an occasion, as the regulation provides Christmas or other “special occasions” as merely examples of when such a bonus might be paid.

Next, the Court of Appeals agreed that the compensation provided for employee participation in the Give Back Time program likewise was excludable from the regular rate calculation. Rejecting the employees’ contention that this claim should not have been dismissed because they pled that the time spent in the program was “work,” the Court of Appeals noted that work has been defined as “physical or mental exertion . . . controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business.” Here, the employees had not pled any facts suggesting that Lowe’s, as opposed to the charitable organization, was the primary beneficiary of the time spent by the employees in the program. In addition, Lowe’s neither required participation in the program nor determined how long or for whom the employees would donate their time. Instead, this time was comparable to the examples of non-work time set forth in the regulations, such as volunteering as a first responder and donating blood.

If you have any questions about this ruling or any other wage and hour question, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Ninth Circuit Tosses $102 Million Award Against Walmart Alleging California Wage Statement and Meal Break Violations

In a significant victory for California employers, the U.S. Court of Appeals for the Ninth Circuit recently reversed a $102 million award against Walmart, in a suit alleging that the retailer violated the California Labor Code’s wage statement and meal-break provisions. Magadia v. Wal-Mart Associates, Inc., 2021 U.S. App. LEXIS 16070 (9th Cir. May 28, 2021).

The Ninth Circuit’s opinion clarified the cognizable harm required to establish Article III standing under California’s Private Attorneys General Act (“PAGA”) and the Labor Code’s wage statement requirements. Most notably:

  • An employee does not have standing to bring PAGA claims in federal court for alleged Labor Code violations that the employee themselves did not suffer.
  • As a means of retroactively adjusting an employee’s overtime rate resulting from bonuses, an employer may make lump-sum payments without identifying a corresponding “hourly rate” for those payments on the employee’s wage statements.

A detailed discussion of the Ninth Circuit opinion is available on Jackson Lewis’s California Workplace Law Blog, here: $102 Million Pay Stub, Meal Break Judgment Against Walmart Reversed

Alaska Supreme Court Cools Down Standard for Establishing State Law Wage & Hour Exemptions

Answering the first of two certified questions from an Alaska federal court and overturning nearly 30-year-old precedent, the Alaska Supreme Court has held that an employer need only establish an exemption under the Alaska Wage and Hour Act by a “preponderance of the evidence,” rather than “beyond a reasonable doubt.” Buntin v. 00073 Tmb Schlumberger Tech. Corp., 2021 Alas. LEXIS 74 (Alaska June 11, 2021). In answering the second certified question, the Court concluded that those exemptions “explicitly linked” in the State law to the comparable exemptions under the federal Fair Labor Standards Act (FLSA) should be given a “fair reading,” while those exemptions not so linked should continue to be “narrowly construed.”

Nearly three decades ago, the Alaska Supreme Court first held, in Dayhoff v. Temsco Helicopters, Inc., 848 P.2d 1367 (Alaska 1993), that an employer must prove the existence of an exemption to the overtime requirements of the Alaska Wage and Hour Act (AWHA) “beyond a reasonable doubt.” Since then, the Court has reiterated that burden of proof on at least two other occasions. But no more.

In answering the first certified question, the Court acknowledged that, in Dayhoff, it had misconstrued the holding of the federal court of claims case on which it premised its conclusion that the reasonable-doubt standard applied to exemptions under the FLSA, and by extension to analogous claims under the AWHA.  “It was error to take [the federal claims court holding] out of context in Dayhoff, and we should have adopted the preponderance of the evidence standard of proof. The [‘]beyond a reasonable doubt[’] standard of proof adopted in Dayhoff was originally erroneous.” The Court added, “Adopting a preponderance of evidence standard promotes consistency between Alaska and federal law and removes unnecessary confusion from the trial process.”

However, in answering the second certified question, the Court noted that the AWHA has not adopted the FLSA in all respects. Thus, while the U.S. Supreme Court recently held, in Encino Motorcars v. Navarro, 138 S. Ct. 1134 (2018), that exemptions under the FLSA should be given a ”fair reading,” only those exemptions under the AWHA that are directly tied to the same exemptions under the FLSA – notably, the Executive, Administrative, and Professional exemptions – likewise should be fairly interpreted. Otherwise, the longstanding, pre-Encino Motorcars standard of narrowly construing exemptions under the AWHA remains in place.

If you have any questions about this ruling, Alaska wage and hour law, or any other wage and hour question, please contact the Jackson Lewis attorney(s) with whom you regularly work.

New Secretary of Labor Hints at Increased Minimum Salary for Overtime Exemptions

Will the DOL again seek to raise the minimum salary level for exempt “white collar” employees?

In testimony before the House Education and Labor Committee on June 10, 2011, Secretary of Labor Marty Walsh stated that the Department of Labor (DOL) is reviewing a Final Rule issued during the Trump administration, in which the DOL increased the minimum salary required to qualify for the Executive, Professional, and Administrative exemptions – a.k.a. the “white collar” exemptions – under the FLSA. Under the Final Rule, which went into effect at the beginning of 2020, the minimum annual salary rose from $23,660 ($455 per week) to $35,568 ($684 per week). In addition, the minimum salary required to satisfy the “Highly Compensated Employee” (HCE) exemption increased from $100,000 per year to $107,432 per year.

In his testimony, Secretary Walsh asserted that the current minimum salary is “definitely too low” and that the Final Rule is under active review by the DOL. However, Walsh provided no further details, other than to add that the DOL was considering a revision to the Final Rule that would provide for regular increases to the minimum salary, a provision that was included in an Obama-era Final Rule but was not part of the current Final Rule. Notably, Walsh did not say whether the Department intended to seek a return to the salary levels set forth in the Obama-era Rule, which would have increased the minimum annual salary for the exemptions to $47,476 – double the minimum salary in effect at the time. That Rule, which also would have increased the minimum salary required for the HCE exemption to $134,004, was struck down by a federal district court in 2016, before it went into effect. During his campaign, then-candidate Biden stated that he wanted to reimplement the Obama-era salary levels. Given the legal challenges that eventually felled the Obama-era Rule, it remains to be seen whether the DOL will attempt such a large increase in the current salary.

Jackson Lewis will continue to monitor and report any updates on this development. If you have any questions about the current Final Rule or any other wage and hour questions, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Agricultural Exemption Does Not Apply to Activities Entirely Away from the Farm

To paraphrase the lyrics of the classic nursery song, Old MacDonald had a farm and on that farm he had a cow – and a duck, horse, and chicken (e-i-e-i-o). And, of course, to tend to that livestock Old MacDonald had to have farm workers, and those farm workers had to be paid. But were those farm workers, like most other employees, entitled to overtime pay under federal law when they worked more than 40 hours a week? Yes – under some circumstances, the Eleventh Circuit Court of Appeals recently held. Ramirez v. Statewide Harvesting & Hauling, LLC, 2021 U.S. App. LEXIS 15215 (11th Cir. May 21, 2021).

One of the lesser-known overtime, and in some cases minimum wage, exemptions to the Fair Labor Standards Act (FLSA) is the “agricultural” exemption. That exemption, found in 29 U.S.C. § 213(b)(12), applies to “any employee employed in agriculture” and includes primary and secondary definitions. The primary definition of agriculture involves what we envision when we think of farming: “the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities . . . , [and] the raising of livestock, bees, fur-bearing animals, or poultry[.]” Id. § 203(f). The secondary definition pulls in in a broad variety of activities related to the primary farming activities, if they are “performed by a farmer or on a farm as an incident to or in conjunction with [primary] farming operations, including preparation for market [and] delivery to storage or to market or to carriers for transportation to market.” Id. This secondary definition includes important – and in the Statewide case decisive – words: “performed by a farmer or on a farm.”

Statewide harvests fruit from about 1,500 fields on multiple farms across Florida, hauling it to packinghouses and processing plants. Most of its harvesting employees are temporary foreign guest workers through the federal H-2A program. Under that program, labor contractors must provide harvest workers with basic necessities such as housing, meals or kitchen facilities, and laundry facilities. In some cases, the time workers spend traveling between the fields and the housing facilities provided by Statewide is mere minutes, but in other cases could be as much as two hours. As part of its contractual and legal obligations, Statewide provides the workers with kitchen facilities and with transportation to grocery stores and banks. These trips for necessities are provided by Statewide crew leaders (field supervisors) on a weekly basis and last approximately four hours a week.

Plaintiff Ramirez was a crew leader who, along with another crew leader, sued the company alleging they were entitled to unpaid overtime compensation for the time spent driving the harvest workers on these trips to the grocery store, bank, etc. In response, Statewide claimed that the plaintiffs were exempt from overtime under the agricultural exemption. The trial court found for the employees, concluding that the exemption did not apply because the necessities trips were not performed “by a farmer or on a farm.” The company appealed and the Eleventh Circuit affirmed the judgment for the employees.

The Eleventh Circuit first noted that the necessities trips clearly did not fall under any of the farming activities set forth in the primary definition of agriculture and therefore the company had the burden of proving that the trips fell under the secondary definition. The definition of “performed . . . on a farm,” added the Court of Appeals, includes only those “activities performed within the geographical area that constitutes a farm.” Here, the necessities trips took place entirely away from any of the farms being harvested, beginning and ending at the harvest workers’ off-site housing facilities – facilities that in some cases were hours away from the fields being harvested. Moreover, the language of the statute requires that the secondary activities be performed on “a” farm, meaning a singular farm. Here, the workers were assigned to work on multiple farms across Florida and because the necessities trips were not associated with any particular farm, the “work is separate from the agricultural activities themselves.” Accordingly, the Eleventh Circuit concluded that the agricultural exemption was inapplicable to the time spent on these trips and, when the plaintiffs worked more than 40 hours per week, they were entitled to overtime pay for the driving time.

If you have any questions about the agricultural exemption or any other wage and hour issue, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Rhode Island Joins List of States Enacting $15 Minimum Wage Law

On May 20, 2021, Governor Dan McKee signed an amendment to Rhode Island law that will see the Ocean State’s minimum wage increase to $15.00 per hour by 2025.  Beginning January 1, 2022, Rhode Island’s minimum wage will increase from its current $11.50 to $12.25. On January 1, 2023, it will increase to $13.00 and then increase another $1.00 per hour each January 1, until reaching $15.00 in 2025.

There are now fewer than 20 states whose minimum wage is equal to or lower than the federal minimum wage of $7.25 per hour, which has been in effect since 2009. Recent efforts to increase the federal minimum wage have failed thus far.

As part of its effort to keep employers informed of the latest minimum wage changes, Jackson Lewis recently established an e-mail alert, “Minimum Wage Watch.” If you or your organization would like to receive these recurring e-mail alerts, you may subscribe here.

If you have any minimum wage questions or questions about any other wage and hour issue, please contact the Jackson Lewis attorney(s) with whom you regularly work.

Commute Time Is Compensable Only When “Integral and Indispensable” to Employee’s Duties, Fifth Circuit Reaffirms

Upholding the trial court’s dismissal of an FLSA collective action, the Fifth Circuit Court of Appeals reiterated that an employee’s commute time is compensable only when the commute is “integral and indispensable” to the employee’s job duties. Bennett v. McDermott Int’l, Inc., 2021 U.S. App. Lexis 10948 (5th Cir. Apr. 16, 2021). The Fifth Circuit has jurisdiction over the federal courts in Texas, Mississippi, and Louisiana.

The plaintiff-employees and their putative class members were employed under a contract related to a natural gas liquefaction facility in Hackberry, Louisiana. Because of the remote location of the facility, they were required by the company to travel to designated park-and-ride sites and then ride employer-provided buses to and from the facility.

The plaintiffs filed suit, alleging they were unlawfully denied both their regular pay (under state law) and overtime pay (under the Fair Labor Standards Act) for the commute time, which could take up to several hours per day. The district court granted motions to dismiss filed by the defendants, holding that the FLSA’s Portal-to-Portal Act, as amended by the Employee Commuting Flexibility Act, barred their claims and that the FLSA also preempted their state law claims.

The employees appealed and the Fifth Circuit affirmed the dismissal of their FLSA claims. The  Court of Appeals noted that employers are only required to pay for work-related activities that take place before and after hours if they are “an integral part of” and “essential to the principal activities of the employees.” Noting that while commuting is, is some sense, necessary to most jobs, a commute is  compensable only if it is tied to the “principal activity” of the work the employee is hired to perform.  Otherwise, the Fifth Circuit added, if the statute was read as basing compensability on the employer’s principal activities (as the plaintiffs asserted), “there [would be] no limiting principle. Everyone would be entitled to commute-time compensation because an employee’s commute is always necessary to the employer’s work getting done.”

The Court of Appeals also rejected the plaintiff’s argument that the inconvenience of, and time required to participate in, the company’s mandatory commuting process rendered the time compensable. “The line Congress chose to draw was whether the commute involved work – work specific to what the employee is employed to do,” not whether the commute was long or inconvenient, the Fifth Circuit concluded. Moreover, the plaintiffs’ general allegation, that “at times” they were required to discuss job duties or accept work calls while commuting, was insufficient to support a claim that the commute time was compensable. However, the Fifth Circuit remanded on this issue, finding that the district court should have given the plaintiffs an opportunity to amend their complaint to set forth enough detail to support the contention that on occasion the commute may have involved compensable time for work-related calls or conversations.

Finally, the Fifth Circuit dismissed the plaintiffs’ claims under the Louisiana Wage Payment Act (LWPA), which provides employee protections for wages “due under the terms of employment.”  The Court of Appeals noted that the employer never agreed to pay for the travel time and that the employer had no policies or procedures that would have required payment. Thus, no “terms of employment” existed under which the state law claim to such wages could be based.

If you have any questions about this decision, commuting under the FLSA, or any other wage and hour issue, please contact a Jackson Lewis attorney.

FLSA’s Extended Limitations Period Requires Plausible Factual Pleadings, Second Circuit Holds

Because the plaintiff failed to allege any facts supporting his claim that his former employer acted willfully in failing to pay him overtime, he was not entitled to the FLSA’s extended, three-year statute of limitations. Therefore, as his claim was filed well after the standard two-year limitations period for such claims had expired, the trial court properly dismissed the claim. Whiteside v. Hover-Davis, Inc.,  2021 U.S. App. LEXIS 12415 (2d Cir. Apr. 27, 2021). In so ruling, the Second Circuit resolved a split within its own district courts and joined with the Sixth Circuit Court of Appeals in an existing circuit court split with the Tenth Circuit. The Second Circuit has jurisdiction over federal courts in New York, Connecticut, and Vermont.

Background

For many years, the plaintiff worked as an overtime-exempt Quality Engineer for the company. In 2012, he was asked to switch jobs to a Repair Organization Technician, a position the company classified as hourly and non-exempt. However, the plaintiff remained a salaried, exempt employee in this position until January 2016, when he returned to his Quality Engineer job. In June 2018, the plaintiff’s position was eliminated and his employment terminated.

In January 2019 – just shy of three years after last working as a Repair Organization Technician – the plaintiff filed suit against the company claiming, among other things, that the company violated the FLSA by failing to pay him overtime during the years he worked in that job. To get around the FLSA’s two-year statute of limitations, the plaintiff alleged that the company’s actions were willful and therefore his claims were timely under the three-year limitations period, applicable when an employer knowingly violates the FLSA or acts with reckless disregard as to whether its actions were unlawful. The trial court dismissed the plaintiff’s FLSA claim, concluding that the three-year statute of limitations was inapplicable because the plaintiff had failed to plead any facts supporting his allegation that the company’s actions were willful.

The Court of Appeals Decision

The plaintiff appealed, arguing that all he was required to do to avail himself of the extended limitations period was to plead willfulness itself, not facts supporting willfulness. Regardless, he added, he had asserted enough facts to support a plausible finding of willfulness. Affirming judgment for the employer, the Second Circuit concluded that to benefit from the three-year statute of limitations, a plaintiff must do more than simply allege willfulness in a conclusory manner. Rather, the plaintiff must provide “well-pleaded factual allegations” in his complaint, just as he must do with respect to the substantive claims themselves.

In reaching this conclusion, the Court of Appeals cited to the U.S. Supreme Court’s decisions in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), which firmly established that courts should not accept as true those allegations in a judicial complaint amounting to “mere legal conclusions,” but instead should determine whether, if true, the “well-pleaded factual allegations . . . plausibly give rise to an entitlement of relief.” In the instant case, the plaintiff failed to sufficiently assert any such factual support for his contention that the company’s actions were willful. Notably, the plaintiff did not not allege that the company adjusted his salary to better align with the pay of the non-exempt employees in the position, nor did he ever complain to his managers or otherwise demonstrate that the company was “aware[ ] of [its] impropriety.” At most, concluded the Second Circuit, the plaintiff’s allegations suggested negligence on his employer’s part.

In so holding, the Second Circuit joined the Sixth Circuit Court of Appeals in concluding that to avail oneself of the three-year limitations period, a plaintiff must sufficiently allege facts, not mere conclusory assertions, that the defendant-employer’s actions were willful. Crugher v. Prelesnik, 761 F.3d 610 (6th Cir. 2014) (holding, in a case under the “structurally analogous” FMLA, that conclusory assertions of willfulness are not enough to invoke the three-year statute of limitations). By contrast, the Tenth Circuit has held that the “mere allegation of willfulness” suffices. Fernandez v. Clean House, LLC, 883 F.3d 1296 (10th Cir. 2018). In addition, the Second Circuit’s decision resolved a split among its own district courts.

Whether the U.S. Supreme Court will take up the issue and resolve the circuit split remains to be seen but, for the time being, the Second Circuit’s decision should be welcomed by employers in New York, Connecticut, and Vermont.

If you have any questions about this decision or any other wage and hour issue, please consult a Jackson Lewis attorney.

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