Employers Beware: Fourth Circuit Extends Statute of Limitations When Workplace Failed to Post FLSA Notice

The Fourth Circuit recently recognized that an employer’s failure to post the required notice of rights under the Fair Labor Standards Act (FLSA) can extend (or “toll”) an aggrieved employee’s statute of limitations. The case involves an individual from the Philippines, Christina Cruz, who came to the United States to work as a domestic employee for defendants from 2002 until 2008.   She alleges that she worked seven days a week for 18 hours per day, and was forced to remain on call all night caring for a family of eight.  She received wages of only $8 to $15 per day during this period.  According to Cruz, she was never permitted to take a day off or to visit her family, her passport was confiscated upon her arrival, and she was threatened with adverse immigration action if she tried to leave. The case is Cruz v. Maypa, No. 13-2363 (4th Cir. Dec 1, 2014).

Ms. Cruz filed her lawsuit against defendants in 2013, or approximately five years after her work ended, alleging violations of the FLSA, among other things.  The U.S. District Court for the Eastern District of Virginia dismissed her claims as time barred, even after applying a three-year statute of limitations for willful violations of the FLSA (as opposed to the two-year limitation period).  When Cruz appealed, the Fourth Circuit reversed and remanded in a strongly worded opinion, which called the employers’ arguments against equitable tolling “offensive.”

Ms. Cruz alleged that no FLSA poster was on display at defendants’ home, so the statute of limitations should be tolled since Cruz was not put on notice of her rights under the FLSA.  Cruz asked the Court to extend the reasoning of cases holding that an employee’s statute of limitations under the Age Discrimination in Employment Act (“ADEA”) may be tolled due to the employer’s failure to post statutory notice.  Defendants took the position that notice would have been futile in this case because the FLSA poster provided by the Wage and Hour Division is not available in Cruz’s native language (Tagalog), so Cruz would not have understood it anyway.  The Court disagreed, stating that defendants’ arguments would lead to an absurd result where non-English speaking employees would be afforded fewer protections under the FLSA.  The Court extended the ADEA’s reasoning to FLSA actions because the notice requirements under both Acts are nearly identical.

Equitable tolling of an expired statute of limitations has historically been available to FLSA plaintiffs only in the most egregious circumstances.  Prior to the Court’s ruling in Cruz, employers had strong arguments that equitable tolling should not apply in the Fourth Circuit unless an employer committed some type of affirmative misconduct in addition to failing to post the FLSA poster, and that a failure to post alone was not enough to justify tolling.  However, after this decision in Cruz, the courts will likely accept a plaintiff’s equitable tolling arguments when the workplace has no FLSA poster, even if no other affirmative misconduct exists.

Although the allegations made by the plaintiff in the present case are quite egregious, the Court did not reference these facts in deciding whether to toll the statutory period.  Instead, the Court seemed to rely strictly on policy justifications, stating that “absent a tolling rule, employers would have no incentive to post notice since they could hide the fact of their violations from employees until any relevant claims expired.”

Once a court determines that equitable tolling is appropriate, the statute of limitations does not begin to run until the date the employee retains an attorney or somehow obtains actual knowledge of her rights under the FLSA.  Accordingly, an employer’s failure to post the FLSA poster could provide both past and present employees with a potentially limitless opportunity to sue their employers for FLSA violations.