Linda Stone v. Troy Construction LLC , 935 F.3d 141 ( 2019 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 18-1825
_____________
LINDA STONE,
on behalf of herself and those similarly situated,
Appellant
v.
TROY CONSTRUCTION, LLC
_______________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. No. 3-14-cv-0306)
District Judge: Hon. James M. Munley
_______________
Argued
March 12, 2019
Before: JORDAN, KRAUSE, and ROTH, Circuit Judges.
(Filed: August 20, 2019 )
_______________
Matthew D.Miller [ARGUED]
Richard S. Swartz
Justin L. Swidler
Swartz Swidler
1101 Kings Highway North – Ste. 402
Cherry Hill, NJ 08034
Counsel for Appellant
James N. Boudreau [ARGUED]
Adam R. Roseman
Greenberg Traurig
1717 Arch Street – Ste. 400
Philadelphia, PA 19103
Michael Burnett
Jacob E. Godard
Greenberg Traurig
1000 Louisiana Street – Ste. 1700
Houston, TX 77002
Counsel for Appellee
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Linda Stone sued Troy Construction Inc. (“Troy”), on
behalf of herself and others similarly situated, alleging a
willful violation of the Fair Labor Standards Act (“FLSA”).
She claims that Troy paid local employees per diem
compensation that should have been classified as wages and
included in the regular rate of pay, which would in turn have
2
affected the calculation of overtime pay. The District Court
was unpersuaded and granted summary judgment for Troy,
holding that, as a matter of law, there had been no willful
violation of the FLSA. Whether a violation is willful
determines the length of the applicable statute of limitations.
In light of its holding that there had been no willfulness in
this case, the Court applied a two-year statute of limitations
and concluded that Stone’s claims were time-barred. Because
the Court, in effect, applied an incorrect standard in deciding
the willfulness question, we will vacate and remand.
I. BACKGROUND
A. Factual Background 1
Troy builds and maintains oil and gas pipelines and
compressor stations across the country, including in
Pennsylvania, where Stone worked. During the relevant
period, many of Troy’s employees had to travel long
distances from their permanent residences to their
Pennsylvania worksites, but Troy acknowledges that it also
“often hired employees closer to [those] worksites[.]” (App.
at 63.) We will refer to the long-distance travelers as “non-
local employees” and the local commuters as “local
employees.” When hiring a new employee, Troy required
him or her to fill out a W-4 form for tax purposes, an I-9
immigration form to verify employment eligibility, and a
1
Summary judgment was granted for Troy on the issue
of willfulness, so we view the facts and draw all reasonable
inferences in Stone’s favor. Prowel v. Wise Bus. Forms, Inc.,
579 F.3d 285, 286 (3d Cir. 2009).
3
form of Troy’s own making to get background information
about the employee (collectively, the “New Hire Forms”). 2
The New Hire Forms included a space for the employee to
note his or her permanent address.
Because non-local employees had to travel long
distances to their worksites, Troy paid them a per diem to
cover their travel costs. During discovery, Troy, through a
corporate designee, defined the term “per diem” in this
context as “a reimbursable -- [i]t’s a payment to an employee
for a reimbursable expense.” (App. at 68.) Specifically, the
“intent of the per diem” was to reimburse out-of-pocket
expenses “[r]elated to traveling to the job, … lodging while
the job’s going on, [and] meals.” (App. at 69.) Troy paid per
diems to both local and non-local employees, unless an
employee opted out by affirmatively telling Troy not to pay
the per diem “[a]t the time of hiring.” (App. at 69.)
2
A “W-4” is a “form indicating the number of
personal exemptions an employee is claiming and that is used
by the employer in determining the amount of income to be
withheld from the employee’s paycheck for federal-income
tax purposes.” W-4 form, Black’s Law Dictionary (11th ed.
2019). An “I-9 Form requires applicants to check one of
three boxes, attesting under penalty of perjury that they are
either a ‘citizen or national of the United States,’ or a ‘lawful
permanent resident’ (and if so, supplying their alien
identification number), or an ‘alien authorized to work until
____’ (and if so, providing the expiration date of their work
authorization).” United States v. Garcia-Ochoa, 607 F.3d
371, 373-74 (4th Cir. 2010).
4
Unsurprisingly, Troy has not identified a single employee
who did so.
For local employees, the per diems often represented a
large fraction of their income. For instance, Troy paid Stone
a per diem of $109 in addition to her hourly wage of $10.75.
Thus, even factoring in overtime, the per diems accounted for
around 40-56% of Stone’s total weekly income from Troy.
In January 2014, Troy, heeding advice from its
accountants, started treating per diems paid to local
employees as taxable income to those employees. Troy made
that tax-accounting change because it understood that a per
diem paid to local employees would not have been viewed by
the Internal Revenue Service (“IRS”) as a proper
reimbursement. Instead, the per diem “would have rolled up
into [an employee’s] wage box[,]” on federal income tax
returns. (App. at 74 (emphasis added).) The company was
thus at pains to distinguish between local and non-local
employees to ensure that per diems paid to local employees
were reported to the IRS as taxable wages.
Despite changing its accounting practice, Troy did not
include per diem payments to local employees in its
calculation of those employees’ regular rate of pay when
determining the company’s overtime obligations. Troy
admitted that a travel per diem paid to a local employee
would not be a reimbursement, but nonetheless, for overtime
purposes, the company treated all per diems, whether paid to
local or non-local employees, the same way. 3
3
“Q. … So making [the per diem for local
employees] taxable, did Troy Construction no longer
5
Linda Stone was a local employee of Troy beginning
in January 2013. She was fired in March 2013. The reasons
for her short tenure and termination are immaterial to this
suit. She received nine paychecks from Troy, the first on
January 18, 2013, and the last on March 15, 2013. She was
paid per diems, but they were not reflected in her overtime
compensation.
B. Procedural Posture
In February 2014, Stone filed the present collective
action, claiming Troy had willfully violated the FLSA, 29
U.S.C. § 201, et seq. 4 (App. at 29.) She alleges that Troy
paid per diems that were not “a legitimate, reasonable
reimbursement of expenses incurred” and that she had
received per diems that “should have been included in her
consider it a reimbursement? A. We treated [it] as a per
diem. We didn’t know if they were using the per diem or
not.” (App. at 75.)
4
In addition, Stone alleged two violations of the
Pennsylvania Wage Laws, including failure to pay overtime
compensation and failure to pay wages earned. Stone does
not challenge that decision and we leave it to the District
Court to reconsider whether to exercise supplemental
jurisdiction over Stone’s state-law claims on remand. Upon
dismissal of the FLSA claim, the District Court “decline[d] to
retain supplemental jurisdiction over the remaining state
claims” (App. at 17), and Stone does not challenge that
decision.
6
regular [wage] rate.” (App. at 36.) The regular wage rate for
an employee is supposed to be calculated to include “all
remuneration for employment paid to, or on behalf of, the
employee.” 29 U.S.C. § 207(e). But it does not include
“reasonable payments for traveling expenses, or other
expenses, incurred by an employee in the furtherance of his
employer’s interests and properly reimbursable by the
employer; and other similar payments to an employee which
are not made as compensation for his hours of
employment[.]” Id. § 207(e)(2); see also DOL Field
Operations Handbook § 32d05a(b) (Feb. 11, 1972) (“[W]here
an employee receives [per diems] but actually incurs no such
additional expenses, the entire amount of the payments shall
be included in determining the regular rate.”). Stone’s
lawsuit sought to recover unpaid compensation that she says
would have been paid for overtime work if her base wage rate
had correctly reflected the per diem payments she received.
A little over a year into the lawsuit, Troy asked Stone
to consent to Troy having “extra time” to submit a responsive
filing in the District Court. (App. at 102.) Troy’s counsel
had scheduling conflicts, and Stone’s counsel agreed to an
extension, conditioned upon Troy “agree[ing] to toll the
statute for the class for the extra time[.]” (App. at 102.)
Troy did agree, stating “[w]e … agree to toll the statute of
limitations pertaining to the FLSA claim for the same period
of time for which the Court grants us an extension[.]” (App.
at 103.) Pursuant to that agreement, the District Court
ordered that “[t]he statute of limitations pertaining to the
FLSA claim shall be tolled from April 13, 2015 to April 27,
2015, at which time it will begin to run again.” (App. at 104.)
7
In December 2015, Stone moved for, and the District
Court granted, conditional certification of her case as an
FLSA collective action. In support of that motion, Stone
attached a sworn affidavit describing Troy’s per diem
payment practice. Many former Troy employees filed
consent forms to join Stone’s collective action, in accordance
with the statutory requirement that “[n]o employee shall be a
party plaintiff to any such action unless he gives his consent
in writing to become such a party and such consent is filed in
the court in which such action is brought.” 29 U.S.C.
§ 216(b). Stone also filed her own formal consent-to-sue
form, but not until March 22, 2016. 5 She later contended, and
still maintains, that her December 2015 affidavit in support of
conditional certification of the collective action should suffice
as her consent to sue.
Troy and Stone both moved for summary judgment.
In Troy’s motion, it argued that Stone’s FLSA claim was
time-barred because she had failed to file a timely consent-to-
sue form, as “[t]he law provides that FLSA claims must be
commenced within two years after the cause of action
accrued, or within three years if the cause of action arises out
of a willful violation.” (App. at 8 (citing 29 U.S.C.
5
“Unlike in a Rule 23 class action, where each person
who falls within the class definition is considered to be a class
member and bound by the judgment unless she has opted out,
a plaintiff … must affirmatively opt into [an FLSA collective]
action by filing [her] written consent with the court in order to
be considered a class member and be bound by the outcome
of the action.” Mickles v. Country Club Inc., 887 F.3d 1270,
1275-76 (11th Cir. 2018) (third alteration in original) (citation
and internal quotation marks omitted).
8
§ 255(a)).) In Stone’s motion, she argued that the record had
established that Troy had “willfully violated the FLSA as a
matter of law” (App. at 122), and so, with application of the
three-year statute of limitations, her claim was timely. In
opposing Stone’s motion for summary judgment, Troy
declared that “genuine disputes [of fact] exist regarding
whether Troy recklessly disregarded its FLSA obligations.”
(App. at 137.)
The District Court granted summary judgment for
Troy. It rested its decision on its conclusion that, as a matter
of law, Troy had not willfully violated the FLSA. The Court
made that determination because, in its view, “there [were]
insufficient facts for a factfinder to reasonably conclude that
the defendant’s conduct amounts to … [a willful] FLSA
violation.” (App. at 10.) Accordingly, despite Troy’s
admission that genuine disputes existed as to its willfulness,
the Court determined that a two-year statute of limitations for
non-willful violations applied to Stone’s claims, and her
claims were thus untimely.
Stone timely appealed.
9
II. DISCUSSION 6
The District Court erred in granting summary
judgment for Troy, a result of applying an overly burdensome
standard for showing willfulness under the FLSA. 7 Under the
proper standard, summary judgment was not warranted
because genuine disputes of material fact do indeed exist as to
Troy’s willfulness in leaving out of the base wage rate for
local employees the per diems they were paid. If, after
appropriate fact-finding, it should be determined that Troy
6
The District Court had jurisdiction under 28 U.S.C.
§§ 1331 and 1367. We have jurisdiction pursuant to 28
U.S.C. § 1291. Our review of the District Court’s grant of
summary judgment is plenary. Capps v. Mondelez Glob.,
LLC, 847 F.3d 144, 151 (3d Cir. 2017). A moving party is
entitled to summary judgment if “there is no genuine dispute
as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). There is a genuine
dispute of material fact “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). “In making this determination, we must view the
facts in the light most favorable to the nonmoving party and
draw all inferences in that party’s favor.” Prowel, 579 F.3d at
286 (citations and internal quotation marks omitted).
7
In addition to challenging the merits of the District
Court’s grant of summary judgment, Stone argued that
summary judgment in Troy’s favor was improper because it
was granted sua sponte. Because we conclude that summary
judgment was inappropriate in light of genuine disputes of
material fact, we need not address that argument.
10
was willful, Stone’s opportunity to recover will not be
entirely time-barred.
A. Willfulness Does Not Require Egregious
Behavior
The fundamental question in this case is not new.
Over thirty years ago, in McLaughlin v. Richland Shoe Co.,
486 U.S. 128 (1988), the Supreme Court addressed “the
meaning of the word ‘willful’ as used in the statute of
limitations applicable to civil actions to enforce the Fair
Labor Standards Act[.]” Id. at 129. It noted that “[t]he
[FLSA] provides that such actions must be commenced
within two years ‘except that a cause of action arising out of a
willful violation may be commenced within three years after
the cause of action accrued.’” Id. (emphasis added) (citation
omitted). Then, based on legislative history and the common
and legal usage of the word “willful” – “considered
synonymous with such words as voluntary, deliberate, and
intentional” – the Court concluded that a violation of the
FLSA was willful if, at minimum, the employer “showed
reckless disregard for the matter of whether its conduct was
prohibited by the [FLSA.]” Id. at 132-33 (citations and
internal quotation marks omitted).
The District Court here required a showing of conduct
worse than the recklessness identified in McLaughlin. It
reasoned that “[t]he sole evidence that plaintiffs point to is a
2014 policy change at Troy that determined that per diems
paid to employees that permanently resided less than 50 miles
from their Troy worksite were to be considered wages for tax
purposes.” (App. at 10-11 (citation omitted).) In
characterizing the record as such, the District Court elided the
11
corporate designee’s repeated statements that “unless the
employee t[old] [Troy] otherwise, [Troy] assumed that
they’re an out-of-town employee and [it] pa[id] the per
diem.” (App. 73; see also App. 69, 72, 86.) The Court was
satisfied with Troy’s rebuttal “that it did not think that the
change would implicate the FLSA[,]” and so, as a matter of
law, there was no willfulness. (App. at 11.) Yet the Court
recognized that Troy “appear[ed] to agree that excluding per
diem[s] when calculating overtime rates for [out-of-state]
employees is acceptable under the statute.” (App. at 11.)
Thus, Troy knew that per diems for non-local employees
were implicated and permissible under the FLSA, but Troy’s
professed ignorance about the implications of the same per
diems paid to local employees did not trouble the Court. That
analysis gives us pause, as it does not give Stone the benefit
of a fair inference that Troy did recognize the implication of
the per diems paid to local employees.
While the District Court did not explicitly state that
Stone had to demonstrate that Troy’s actions were worse than
reckless, that is what it in effect required. The District Court
was evidently looking for something egregious. But any
requirement for a degree of egregious behavior conflicts
directly with another Supreme Court precedent. In Hazen
Paper Co. v. Biggins, 507 U.S. 604 (1993), the Supreme
Court made clear that an “employee need not additionally
demonstrate that the employer’s conduct was outrageous,” to
demonstrate willfulness. 8 Id. at 617. Requiring a showing of
8
Hazen addressed the willfulness standard under the
Age Discrimination in Employment Act (“ADEA”), which
the Court equated through analogy and explicit reference to
the FLSA. 507 U.S. at 614-15. “The word ‘willful’ is widely
12
egregious conduct is tantamount to requiring proof of
outrageous conduct, and, thus, is not properly part of the
willfulness inquiry. 9
Troy tries to justify the District Court’s more severe
test by citing our decision in Souryavong v. Lackawanna
County, 872 F.3d 122 (3d Cir. 2017). According to Troy,
“Souryavong makes clear that establishing a willful violation
requires … a degree of egregiousness[.]” (Answering Br. at
17.) We disagree.
We directly addressed the difference between
egregiousness and willfulness in our post-Souryavong opinion
in Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018).
That case involved a civil penalty for a failure to report
certain foreign banking activity. Id. at 147-48, 152. We
reversed the district court’s determination that there had been
used in the law, and, although it has not by any means been
given a perfectly consistent interpretation, it is generally
understood to refer to conduct that is not merely negligent.
The standard of willfulness that was adopted …–that the
employer either knew or showed reckless disregard for the
matter of whether its conduct was prohibited by the statute–is
surely a fair reading of the plain language of the [FLSA].” Id.
at 615 (quoting McLaughlin, 486 U.S. at 133).
9
Compare the definition of outrageous – “[e]xceeding
all reasonable bounds of human decency; extremely shocking,
offensive, or unfair” – with the definition of egregious –
“[e]xtremely or remarkably bad; flagrant[.]” Outrageous &
Egregious, Black’s Law Dictionary (10th ed. 2014).
13
no willfulness in the failure to report, reasoning that the
district court’s analysis had improperly focused on
egregiousness. Id. at 153. We held that “the overall
egregiousness of [the defendant’s] conduct … [was] not
required to establish willfulness[.]” 10 Id. (emphasis added)
(internal quotation marks omitted). Referencing the Supreme
Court’s decision in Safeco Insurance Company of America v.
Burr, 551 U.S. 47, 57 (2007), 11 we noted that, “where
‘willfulness’ is an element of civil liability, ‘we have
generally taken it to cover not only knowing violations of a
standard, but reckless ones as well.’” Id. at 152 (citation
omitted).
Thus, Supreme Court case law and our own precedent
counsel against a standard for willfulness that requires a
showing of egregiousness. Troy has misread Souryavong, but
that error, and the District Court’s, is understandable, given
some of our language in that case.
In Souryavong, we affirmed a grant of judgment as a
matter of law where the only evidence suggestive of
willfulness was an email that postdated the two appealing
employees’ overtime violations. 872 F.3d at 125-26. We
reached that conclusion after discussing the standard of
willfulness, reiterating that “[t]he Supreme Court defines
10
Reckless disregard may be satisfied through
“evident indifference[,]” Martin v. Selker Bros., 949 F.2d
1286, 1296 (3d Cir. 1991), and egregiousness is not necessary
for an employer to disregard a meaningful possibility of
violating the FLSA.
11
Safeco relied on McLaughlin, 486 U.S. at 132-33, to
characterize the willfulness standard. 551 U.S. at 57.
14
‘willfulness’ to include situations when the employer, at the
time of its FLSA violation, either ‘knew’ its conduct was
prohibited by the FLSA or ‘showed reckless disregard for the
matter.’” Id. at 126 (citation omitted). But then we posed a
hypothetical. Id. at 126-27. We considered whether
willfulness could be found if a particular piece of evidence –
that email evidencing possible awareness of an FLSA
violation – had predated the violations. Id. Within that
hypothetical framework, we sought a comparison and said
that “decisions from our sister circuits indicate that an FLSA
violation must have a degree of egregiousness that is lacking
[here.]” Id. at 127.
That perhaps confusing detour was based on our
review of cases from two other circuits. Id. First, we
considered a Ninth Circuit case finding that “a jury question
on willfulness [wa]s present when a city [wa]s well aware of
the FLSA’s strictures” but “allow[ed] a misclassification of a
monthly payment to continue for nine years.” Id. (citing
Flores v. City of San Gabriel, 824 F.3d 890, 896, 905-07 (9th
Cir. 2016)). Then, looking to an Eleventh Circuit case, we
noted there was a jury question on willfulness “if a family
fail[ed] to pay a nanny a minimum wage,” when evidence
indicated that “the family ‘knew’ about minimum wage laws,
… the family required her to work twice as many hours as the
family claimed, … and instructed her to lie about her
employment.” Id. (citing Davila v. Menendez, 717 F.3d 1179,
1182-83, 1185 (11th Cir. 2013)). We compared those
examples to Souryavong’s case and concluded that “nothing
[here] indicates … [a] similar level of recklessness or ill will
…. [or] manipulation and concealment[.]” Id.
15
Our consideration of a hypothetical and our discussion
of egregious behavior in other cases should not, however,
mislead litigants or district courts to believe we have
established egregiousness as a prerequisite for finding an
FLSA violation to be willful. The language from Souryavong
that Troy leans on is non-binding dictum, see Abdelfattah v.
DHS, 488 F.3d 178, 185 (3d Cir. 2007) (holding that a
particular requirement articulated in a prior decision was
dictum when it had no bearing on the outcome of that appeal),
and, importantly, if understood as Troy suggests, would be
contrary to the Supreme Court’s instructions on the meaning
of willfulness. 12 See Hazen, 507 U.S. at 617 (“[T]he
employee need not additionally demonstrate that the
employer’s conduct was outrageous[.]”); United States v.
Greenspan, 923 F.3d 138, 157-58 (3d Cir. 2019) (“[W]e are
careful not to read our precedents to gainsay those of the
Supreme Court.”). Egregiousness is rightly thought of as a
high-water mark, representing behavior that clearly
establishes willfulness, as opposed to a baseline requirement
for such a finding. See, West v. Nabors Drilling USA, Inc.,
330 F.3d 379, 391 (5th Cir. 2003) (declining to read that
Circuit’s precedent “to superimpose a heightened test of
egregiousness on the requirement . . . that an employer must
have known or shown reckless disregard for the matter of
12
To the extent that Troy further contends that
Souryavong requires an employee to prove willfulness only
through direct—as opposed to circumstantial—evidence, we
reject that interpretation as inconsistent with Hazen Paper.
See Hazen Paper Co., 507 U.S. at 617 (“[T]he employee need
not . . . provide direct evidence of the employer’s
motivation[.]”).
16
whether its conduct was prohibited[.]” (citation, internal
quotation marks, and alterations omitted)).
In sum, willfulness under the FLSA is established
where “the employer either knew or showed reckless
disregard for the matter of whether its conduct was prohibited
by the [FLSA.]” McLaughlin, 486 U.S. at 133. It does not
require a showing of egregiousness. Hazen, 507 U.S. at 617.
B. Genuine Disputes of Material Fact
Pertaining to Willfulness
When the proper standard for determining willfulness
is applied, it becomes apparent that summary judgment
should not have been granted because genuine disputes of
material fact exist as to Troy’s willfulness. Troy itself
admitted that. And statements made by its chosen corporate
designee, Vice President and CFO Daniel O’Hare, as well as
reasonable inferences derived from the record, confirm that a
reasonable factfinder could say that Troy had been at least
reckless in its accounting treatment of per diems and hence
had been willful in violating the FLSA.
It is true that Troy’s 2014 change in tax accounting –
treating per diems paid to local employees as taxable wages –
post-dated the last of Stone’s paychecks, on March 15, 2013,
but that does not mean that the change has no probative value
here. Drawing reasonable inferences in Stone’s favor, Troy
acted to correct a previously understood incongruity in its per
diem payment practices. Having treated those payments as
reimbursable expenses when, as paid to local employees, they
were actually wages, Troy made the accounting change at a
17
time of its choosing, though its recognition of the need for the
change may have come earlier. 13
Even ignoring that change in accounting practices,
however, there was sufficient evidence to create genuine
disputes of material fact as to Troy’s willfulness. Mr.
O’Hare’s testimony demonstrated that Troy was aware that a
“per diem is a reimbursable” (App. at 68), and that the
reimbursement in question was for employee expenses related
to traveling to the worksite, like travel, lodging, and food. A
per diem paid to a local employee with no such expenses is
miscast as a reimbursement. There is simply nothing of
significance to reimburse. Since the per diems paid to local
employees did not reimburse travel expenses, it would be
reasonable to conclude that Troy knew those payments were
actually wages.
That Troy understood it was misclassifying wages for
local employees could be inferred from its total reliance on
employee self-reporting to catch unwarranted
13
Policy concerns sometimes prompt the law to forbid
later corrective action from being used as evidence, so as to
not pose a disincentive to appropriate changes in behavior.
See Fed. R. Evid. 407 (“When measures are taken that would
have made an earlier injury or harm less likely to occur,
evidence of the subsequent measures is not admissible to
prove: negligence … .”). Neither party suggests that Troy’s
tax-accounting change falls within that prohibition, and we
need not confront that issue now. We merely note that, if
presented with evidence of the accounting change, a rational
factfinder could conclude that the change is probative of
willfulness.
18
reimbursements. Troy paid local employees per diems
“unless [an] employee [told] [it] otherwise[.]” (App. at 73.)
Despite “often hir[ing]” local employees, (App. at 63,) Troy
simply “assume[d] that [an employee is] an out-of-town
employee and [it] [paid] the per diem[]” (App. at 73).
Perhaps a factfinder will view that as an innocent act by a
well-motivated employer. But a factfinder could reasonably
conclude that no sensible employer expects employees to say
“don’t give me money.” Because Troy adopted a blanket
policy excluding per diems from all employees’ pay despite
knowing that it “often” hired local employees, a factfinder
could conclude that Troy had to know it was underreporting
wages for that part of its workforce. See Morgan v. Family
Dollar Stores, Inc., 551 F.3d 1233, 1270, 1280 (11th Cir.
2008) (finding the jury’s determination of willfulness legally
sufficient where the employer “never studied” which
employees were implicated under the FLSA).
Troy contends it did not have enough information to
determine whether a per diem was appropriate because it is
difficult to ascertain whether an employee is local or not,
since employees often move temporarily. But a jury might
find unpersuasive Troy’s protestation that it could not
determine which employees were, in fact, local. The record
makes clear that employees’ permanent addresses were
provided to Troy and documented in the New Hire Forms.
Troy reasons that it “did not know whether the address …
listed [in the New Hire Forms] was a permanent address or
just a [hotel or temporary] address … for the duration of the
Troy project.” (Answering Br. at 7.) But Troy could have
begun to figure out which employees were local, if it had only
elected to look, and, if necessary, ask a question or two. See
Gagnon v. United Technisource, Inc., 607 F.3d 1036, 1042
19
(5th Cir. 2010) (finding no clear error in the District Court’s
finding that an employer acted willfully, despite the
employer’s argument that the employee “did not give [the
employer] enough information about his address change or
how much he required in per diem”). In fact, Troy was able
to determine where employees permanently resided without
any apparent difficulty in 2014, when it started treating local
employees’ per diems as taxable.
Finally, the size of the per diems payments could also
reflect recklessness. The per diems were not some minor
fringe benefit, but rather constituted a considerable portion of
local employees’ pay.
In short, drawing all reasonable inferences in Stone’s
favor, even without evidence of the 2014 change in
accounting practices, there is at least a genuine dispute as to
whether Troy knew that per diems paid to local employees
were wages that must be included in the regular base rate
when calculating overtime pay. Hence, it was not surprising
that, while addressing Stone’s summary judgment motion in
the District Court, Troy frankly admitted that “genuine
disputes exist regarding whether Troy recklessly disregarded
its FLSA obligations.” (D.I. 128 at 12.)
The District Court therefore erred in declaring that
“there are insufficient facts for a factfinder to reasonably
conclude that the defendant’s conduct amounts to something
more than an ordinary FLSA violation.” (App. at 10.) That
error means that the District Court also erred in applying the
FLSA’s two-year statute of limitations and concluding that
Stone’s claims were necessarily untimely.
20
C. Stone’s Claims Were Not All Necessarily
Time-barred
To evaluate whether all of Stone’s claims were time-
barred, the District Court had to determine “the date on which
this lawsuit commenced.” (App. at 13.) An FLSA collective
action is commenced for an “individual claimant-- (a) …
when the complaint is filed, if he is specifically named as a
party plaintiff in the complaint and his written consent to
become a party plaintiff is filed [therewith] … ; or (b) if such
written consent was not so filed or if his name did not so
appear-- … [when] such written consent is filed[.]” 29
U.S.C. § 256. It is an oddity that a plaintiff who files a
complaint in her own name, unless she files a separate written
consent, is not treated as consenting to join the very lawsuit
she initiated. See, e.g., Bonilla v. Las Vegas Cigar Co., 61 F.
Supp. 2d 1129, 1139 (D. Nev. 1999) (stating it is “redundant
and unusual to make named plaintiffs file their consents with
the Court[,]” despite “the fact that th[os]e statutory
requirements are repetitive or wasteful, they are the
unambiguous requirements which Congress has duly
enacted”). Nevertheless, that is one of the shoals on the
FLSA waterway, and parties must navigate accordingly.
Deciding whether Stone’s claims are timely depends in
part on whether her affidavit in support of conditional
certification, filed on March 30, 2015, constituted a form of
atypical, but acceptable, written consent. Otherwise, Stone
was relegated to the date of her formal consent-to-sue form,
filed on March 22, 2016. Stone argues that the affidavit was
sufficient, while Troy counters that only the later filing served
the purpose. The District Court agreed with Troy.
21
Despite acknowledging “considerable flexibility in
what constitutes written consent[,]” the District Court
concluded that Stone’s affidavit was insufficient because it
did not “expressly indicate” a desire to consent to be a party
plaintiff, “refer to a lawsuit,” or “mention any violations of
the FLSA.” (App. at 15-16.) Rather, it was “merely a
reiteration of facts surrounding [Stone’s] employment.”
(App. at 15-16.) Accordingly, the Court used the date of
Stone’s later-filed consent-to-sue form to start the clock for
the statute of limitations. And based on that date, March 22,
2016, and on its conclusion that the two-year statute of
limitations controls, the Court held that “plaintiffs’ FLSA
claim is time-barred[,]” so it granted summary judgment for
Troy. (App. at 16 .)
Employees typically supply consent to join an FLSA
collective action through a formal consent-to-sue form, but
“[c]ourts have shown considerable flexibility in what
constitutes ‘written consent’ as long as the signed document
indicates consent to join the lawsuit.” Manning v. Gold Belt
Falcon, LLC, 817 F. Supp. 2d 451, 454 (D.N.J. 2011) (“With
respect to form, courts have shown considerable flexibility as
long as the signed document indicates consent to join the
lawsuit.”). Here, Stone filed her complaint on February 19,
2014. More than a year later, she filed her March 30, 2015
affidavit, and, another year after that, she finally filed a
consent-to-sue form, on March 22, 2016. Troy, of course,
contends that the statute of limitations bars Stone’s claim
because her formal consent-to-sue form is the operative
document and was untimely. We agree that the affidavit does
not qualify as a written consent, but disagree that Stone is
necessarily out of court.
22
While there is no uniform test to determine when a
document adequately expresses an individual’s desire to be an
FLSA plaintiff, courts have focused upon whether the
document manifests, in some fashion, a clear intent to join the
action. See Montalvo v. Tower Life Bldg., 426 F.2d 1135,
1148-49 (5th Cir. 1970) (where “the original document
demonstrated clearly that the plaintiffs, by signing their
names, had in fact given their consent to becoming plaintiffs
in a suit for recovery under the Act[]” that document
“constituted ‘written consent’ … sufficient to toll the statute
of limitations[]”); Manning, 817 F. Supp. 2d at 454 (“In some
cases, plaintiffs have been deemed to have manifested
consent, although they did not submit the specific form
approved by the Court.”); see also Ellen C. Kearns et al., The
Fair Labor Standards Act § 17.II.B.2, at 16-17 (3d ed. 2018)
(“a consent form must clearly manifest the individual’s
consent to become a party plaintiff to the litigation.”
(citations and internal quotation marks omitted).) Here, Stone
says that her affidavit “asserted several facts supporting her
claim that her co-workers were similarly situated with her
with respect to her FLSA claims.” (Opening Br. at 31.) But
the affidavit did not identify Stone as a party, it did not refer
to this litigation, and it did not mention any violations of the
FLSA. Stone’s post-hoc characterization of the affidavit as
an FLSA consent to sue seems to be wishful thinking. With
the benefit of hindsight, she no doubt wishes she had filed her
consent sooner than March 22, 2016, but she did not, and the
District Court did not err in concluding that the affidavit was
not valid consent pursuant to 29 U.S.C. § 256.
Nonetheless, because Stone’s FLSA claim is really a
set of claims, those claims are not all necessarily untimely.
The parties’ tolling agreement suspended the running of the
23
three-year statute of limitations for 14 days, saving two of
Stone’s claims at the summary judgment stage.
For each payday where Troy “failed to pay” its
employees “proper wages[,]” “a new and separate cause of
action for unpaid overtime wages accrued[.]” (App. at 12
(District Court Opinion) (citations omitted)); see Hughes v.
Region VII Area Agency on Aging, 542 F.3d 169, 187 (6th
Cir. 2008) (“A[n] [FLSA] cause of action … accrue[s], as a
general rule, at each regular payday immediately following
the work period during which the services were rendered for
which the wage or overtime compensation is claimed.”
(citations and internal quotation marks omitted)). As
discussed above, the District Court erred in applying a two-
year statute of limitations to Stone’s claims. Instead, because
there are genuine disputes regarding willfulness, it should
have assumed, for purposes of summary judgment, that the
three-year statute of limitations applies and then asked
whether Stone’s claims were timely. 14 See Alvarez v. IBM
Restaurants Inc., 839 F. Supp. 2d 580, 588 (E.D.N.Y. 2012)
(“[G]enerally … where willfulness is in dispute, a three year
statute of limitations applies[.]”)
Once the longer limitations period is taken into
account, the effect of Stone’s and Troy’s tolling agreement
14
In assuming willfulness for purposes of summary
judgment, we in no way imply how that issue should be
decided at trial. To the contrary, we recognize that, should a
jury find that Troy violated the FLSA but that willfulness was
lacking, Stone’s claims and those of any plaintiffs beyond the
two-year statute of limitations would be time-barred,
precluding recovery on those claims. See 29 U.S.C. § 255(a).
24
must be considered. The District Court recognized that
agreement in an order saying that “[t]he statute of limitations
pertaining to the FLSA claim shall be tolled from April 13,
2015 to April 27, 2015, at which time it will begin to run
again.” (App. at 104.) Troy argues that the agreement “only
applied to the claims of potential opt-in plaintiffs[,]” and that
Stone was not a party of that sort. (Answering Br. at 10
(emphasis added).) That argument, however, is unpersuasive.
Neither the order enforcing the agreement nor the set of
emails embodying the agreement imposed any such
limitation. Rather, those documents make clear that the
agreement was for the parties’ mutual benefit and that Troy
agreed to “toll the statute of limitations pertaining to the
FLSA claim[.]” (App. at 103.) There is no indication that the
agreement was intended to be solely or even primarily for the
benefit of “potential opt-in plaintiffs.” The tolling agreement
benefited Stone and the potential FLSA class, and was given
in exchange for Stone’s consent to Troy taking extra time to
meet a filing requirement.
Stone’s last two paydays were March 8 and 15, 2013.
For summary judgment purposes, those two paydays,
providing a basis for separate causes of action, each initiated
a three-year statute of limitations that was extended 14 days
by the tolling agreement. Thus, for the March 8, 2013,
payday, she had until March 22, 2016 to file her consent-to-
sue form, and for the March 15, 2013, payday, she had until
March 29, 2016 to do so, assuming that Troy willfully
violated the FLSA and that the three-year limitation period
applies. Because Stone filed her formal consent-to-sue form
on March 22, 2016, those two claims survive summary
judgment.
25
III. CONCLUSION
In conclusion, the District Court erred in holding, at
the summary judgment stage, that all of Stone’s claims were
time barred. Summary judgment in favor of Troy was not
warranted because, assuming willfulness is established at
trial, Stone had two claims that fall within a three-year statute
of limitations, as extended by 14 days due to the tolling
agreement. We will therefore vacate the District Court’s
grant of summary judgment in favor of Troy and remand the
case for further proceedings.
26