Linda Stone v. Troy Construction LLC
935 F.3d 141
3rd Cir.2019Background
- Troy Construction paid travel per diems to employees; non-local employees traveled long distances, local employees did not. Per diems often comprised a large portion of local employees’ pay (e.g., Stone).
- Troy treated per diems to local employees as taxable wages for IRS purposes starting in 2014, but it never included per diems in the regular rate for overtime calculations during the relevant period.
- Linda Stone, a local employee, received per diems January–March 2013; she filed an FLSA collective action in February 2014 claiming per diems paid to local employees were wages that should have been included in the regular rate.
- The District Court granted summary judgment for Troy, holding as a matter of law there was no willful FLSA violation and applied the two-year statute of limitations, finding Stone’s claims untimely.
- On appeal, the Third Circuit held the District Court applied an overly stringent willfulness standard (requiring egregious conduct) and found genuine disputes of material fact exist as to whether Troy acted willfully; thus summary judgment was improper for all claims.
- The Court concluded two of Stone’s pay-period claims survived because, assuming willfulness and accounting for a 14-day tolling agreement, they fell within the three-year limitations period.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Troy’s exclusion of per diems from the regular rate was a willful FLSA violation | Stone: Troy knew or recklessly disregarded that per diems paid to local employees were wages and should be included in the regular rate | Troy: No willfulness; any accounting change occurred after Stone’s employment and company lacked awareness that FLSA was implicated | Willfulness requires knowing or reckless disregard (McLaughlin); egregiousness is not required; genuine fact disputes exist about Troy’s recklessness, so summary judgment was improper |
| Proper standard for willfulness under FLSA statute of limitations | Stone: McLaughlin’s reckless-disregard standard applies; three-year limitation should govern | Troy: Relies on Third Circuit language suggesting egregiousness may be required | Court: Adopts McLaughlin standard (knew or showed reckless disregard); Hazen prohibits an additional egregiousness requirement |
| Whether Stone’s March 30, 2015 affidavit constituted written consent to join the collective (commencement date) | Stone: Affidavit supporting conditional certification suffices as written consent | Troy: Only formal consent-to-sue filed March 22, 2016 qualifies; earlier affidavit insufficient | Court: Affidavit did not clearly manifest consent; District Court correctly held affidavit was not valid consent, but two pay periods still survive under three-year period plus tolling |
| Whether any of Stone’s claims survived the statute of limitations | Stone: If willful, three-year period applies and some paydays are timely | Troy: Two-year period applies; claims are time-barred | Court: Because willfulness is disputed, assume three-year period for summary-judgment purposes; after 14-day tolling, two paydays (Mar 8 & Mar 15, 2013) are timely and survive summary judgment |
Key Cases Cited
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988) (willfulness under FLSA means employer knew or acted with reckless disregard)
- Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) (employee need not show employer’s conduct was outrageous to establish willfulness)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (willfulness covers knowing and reckless violations)
- Souryavong v. Lackawanna County, 872 F.3d 122 (3d Cir. 2017) (distinguishes evidence of willfulness; language suggesting egregiousness is dicta)
- Bedrosian v. United States, 912 F.3d 144 (3d Cir. 2018) (egregiousness not required to establish willfulness; reckless conduct suffices)