An employer that willfully violates the Fair Labor Standards Act (FLSA) in bad faith, faces stiff penalties and, in some cases, even criminal prosecution. The United States Department of Labor employs investigators across the country that are tasked with collecting data on wages, hours and other employment conditions to enforce the FLSA. Couple that with a workforce that is becoming more knowledgeable of their rights under wage and hours laws, and a team of excellent litigators ready to assist those aggrieved workers in the pursuit to enforce those rights, and what an employer has is a recipe for trouble, if they’re not careful.
If it is established that an employer willfully violated the FLSA the statute of limitations is extended from two to three years, which would allow an aggrieved employee to go back an additional year in their claim for damages. Additionally, if the employer fails to establish that their violation of the FLSA was made in good faith, then the statute requires that they pay the aggrieved employee liquidated (or double) damages.
However, is it possible for an employer to willfully violate the statute, but do so in good faith? Although the question seems silly, the answer might surprise you.
Willful Violation of the FLSA
The determination of whether there has been a willful violation of the FLSA by the employer is a question of fact for the jury to decide. To establish willfulness, the employee must prove by substantial evidence that the employer knew it was in violation of the FLSA or acted in reckless disregard as to whether it was in violation of the FLSA. Under the Code of Federal Regulation, 5 C.F.R. § 551.104 (2011) defines “reckless disregard” as the “failure to make adequate inquiry into whether conduct is in compliance with the Act.”
If the jury decides that the employer knew it was in violation of the FLSA or that it acted with reckless disregard of whether it was in violation of the FLSA, then the normal two year statute of limitations is extended to three years. This can have a significant impact, particularly in a large class action, where the additional year added to the statute of limitations opens the door to many employees who otherwise would have had their claims time-barred.
Violation of the FLSA in Good-Faith
Unlike a jury’s determination of whether there has been a willful violation the FLSA, the question of whether the employer’s violation was made in good-faith is a question of law for the judge to decide. Additionally, the burden of proof in establishing good-faith rests with the employer, not the employee. If the employer is unable to convince the judge that the violation was made in good-faith, then the FLSA requires that they pay the aggrieved employee(s) double the back wages owed.
In order to establish that the violation of the FLSA occurred in good faith, the employer must prove to the court that it acted with both objective and subjective good faith. This often proves to be a difficult burden for the employer to meet. To prove subjective good faith, the employer must show that it had and honest intention to ascertain what the FLSA requires and to act in accordance with what the FLSA required. Additionally, the objective component of the burden of proof requires that the employer establish reasonable grounds for believing its actions comported with the FLSA. Ignorance of the law alone will not establish that the employer acted in good faith.
Willful Violation of the FLSA Made in Good Faith
The answer to the question of whether an employer can violate the FLSA in good faith, after a jury has determined they willfully violated the FLSA, is largely no – it is not possible. The Fifth, Sixth, Ninth, Tenth, and Eleventh Circuits have all held that if a jury concludes that the employer willfully violated the FLSA, finding that violation to be in good-faith would be inherently inconsistent with the purpose of the FLSA. However, a minority of Circuits, namely the Fourth and the Eighth Circuits, have held that different burdens of proof could, in theory, allow for the finding of a willful violation of the FLSA that occurred in good faith.
In practice, the courts have yet to face the scenario where there has been finding of willfulness by the jury and a subsequent finding of good-faith by the judge.