Advising And Defending Businesses

Three-Year Statute of Limitations Applies to a Willful Refusal to Pay Overtime Under FLSA

On Behalf of | Mar 9, 2021 | Employment Law

On March 2, 2020, the U. S. Court of Court of Appeals for the Ninth Circuit in Scalia v. Employer Solutions Staffing Group, LLC, et al. affirmed a district court’s summary judgment in favor of the U. S. Secretary of Labor against ESSG in an action alleging that its failure to pay overtime to employees who worked more than 40 hours in a workweek violated the Fair Labor Standards Act. ESSG contracted with other companies, including Sync Staffing, to recruit employees and place them at jobsites for which ESSG handled administrative tasks, including payroll. In this case, Sync Staffing placed the recruited employees at a jobsite run by TBG Logistics and instructed the ESSG employee responsible for payroll processing to pay the employees’ overtime hours as “regular” hours. To comply with Sync Staffing’s instruction, the ESSG employee had to dismiss numerous error messages from ESSG’s payroll software. She later admitted that she knew the recruited employees were not being paid correctly for the overtime they had worked.

The Scalia Court noted that a two-year statute of limitations ordinarily applies to claims brought under FLSA, but the limitations period extends to three years for a “willful violation.” Because ESSG, through its agent, recklessly disregarded the possibility that it was violating the FLSA, the three-year statute of limitations applied, and the affected employees were entitled to approximately $78,500 in unpaid overtime wages, and an equal amount in liquidated damages. Finally, the Scalia Court rejected ESSG’s cross-claims against the other defendants, holding that “the FLSA does not provide a right to contribution or indemnification for liable employers.”