In Cruz v. Maypa, 773 F.3d 138 (4th Cir. 2014), the Fourth Circuit held that the limitations period for claims under the Fair Labor Standards Act was equitably tolled because the employer failed to post the required notice explaining workers’ rights under the FLSA. The decision is important because it means an employer who fails to post the required notice may lose its ability to assert a statute of limitations defense in FLSA cases.
Congress enacted the FLSA “to protect all covered workers from substandard wages and oppressive working hours.” Trejo v. Ryman Hosp. Props., Inc., 795 F.3d 442, 446 (4th Cir. 2015) (quotes omitted.) To accomplish these goals, the FLSA requires employers to pay their employees both a minimum wage and overtime pay. Hall v. DIRECTV, LLC, 846 F.3d 757, 761 (4th Cir. 2017).
Specifically, the FLSA requires employers to pay their employees at least the federal minimum wage. 29 U.S.C. § 206(a)(1). And it requires employers to pay not less than time and a half for each hour worked over forty hours during a workweek. Id. § 207(a)(1).
Relevant to the decision in Cruz, the FLSA also requires employers to “post and keep posted a notice explaining the [FLSA] … in conspicuous places”:
Every employer employing any employees subject to the Act’s minimum wage provisions shall post and keep posted a notice explaining the [FLSA], as prescribed by the Wage and Hour Division, in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy.…
Claims for violations of the minimum wage or overtime provisions of the FLSA have a 2- or 3-year statute of limitations. 29 U.S.C. § 255(a).
This case involved a horrible story of forced labor and human trafficking. Cruz was a citizen of the Philippines. She spoke Tagalog and Kapampangan fluently, and spoke limited English. In 2001, a friend told Cruz about an opportunity to travel to the United States to work for Maypa, who at the time was employed by the World Bank. Cruz submitted her resume. Maypa later faxed Cruz an employment contract. The contract said Cruz would be employed as a domestic employee at Maypa’s house for two years where she would work 35-40 hours per week for $6.50 an hour. Cruz, 773 F.3d at 139-43
Cruz reviewed the contract with the help of friends who were more fluent in English. She was excited about the terms. But before Cruz could sign, Maypa told her over the phone that she would actually be paying Cruz only $250 a month rather than the $6.50 per hour. Cruz did not know that the FLSA required a much higher minimum wage. On January 17, 2002, she signed the contract. Shortly thereafter she left the Philippines for the first time and flew to the United States. Id.
Soon after Cruz arrived in Virginia, the Maypas began subjecting her to inhumane working and living conditions. Cruz was required to work seven days a week for 17 to 18 hours per day. She was expected to remain on call at night. In the six years she remained under the family’s control, Cruz was never allowed to take a day off, even when she was ill. She was expected to provide 24–hour care for all four of the family’s children. She was directed to maintain two separate family homes by mowing the lawns, trimming trees, shoveling snow, cleaning the pool, and performing other landscaping duties. For this labor, Cruz initially was initially paid just $250 per month, or approximately $8 per day. By the time of her escape six years later, Cruz was making $450 per month, which amounted to about $15 per day. Id.
Maypa used Cruz’s immigration status and vulnerable situation to keep her from leaving. Within hours of Cruz’s arrival at Maypa’s home, Maypa confiscated Cruz’s passport. The Maypas never permitted Cruz to return to the Philippines to visit her family, even when relatives died and when her daughter and father suffered life-threatening health events. The Maypas also prohibited Cruz from leaving their homes alone except to walk their dog. Cruz did not know anyone in Virginia besides the family, and they lived in rural areas with no sidewalks and no access to public transportation. She was “effectively trapped in their homes.” In 2008, with the help of a friend in another state,, she escaped. Cruz, 773 F.3d at 139-43.
At no point did the Maypas post the required notice of employees’ rights to minimum wages and overtime wages under the FLSA regulation cited above.
In 2013, more than 5 years after escaping, Cruz filed suit asserting various causes of action, including claims for violation of the FLSA. As noted above, FLSA claims have a 2- or 3-year statute of limitations. 29 U.S.C. § 255(a).
The district court declined to equitably toll Cruz’s claims and therefore dismissed Cruz’s FLSA claims as time-barred because she had not brought them within the FLSA’s maximum three-year limitations period for willful violations. Cruz, 773 F.3d at 142-43.
The Court’s Decision
The Fourth Circuit held that Cruz’s FLSA claims should be equitably tolled due to the defendants’ failure to post the required notice under the FLSA.
In reaching this conclusion, the Court first noted that equitable tolling is generally available when 1) “the plaintiffs were prevented from asserting their claims by some kind of wrongful conduct on the part of the defendant,” or 2) “extraordinary circumstances beyond plaintiffs’ control made it impossible to file the claims on time.” Cruz at 146 (quoting Harris v. Hutchinson, 209 F.3d 325, 330 (4th Cir. 2000) (internal quotation marks omitted)).
The Court evaluated this rule in light of its earlier decision in Vance v. Whirlpool Corp., 716 F.2d 1010 (4th Cir. 1983), which held that the 180–day filing requirement of the Age Discrimination in Employment Act (“ADEA”) was tolled because the plaintiff’s employer failed to post statutory notice of workers’ rights under the ADEA. Cruz at 146 (discussing Vance at 1013).
The Court noted that it made good sense to extend Vance’s reasoning to the FLSA. After all, the notice requirements in the ADEA and the FLSA are almost identical. The ADEA regulation, 29 C.F.R. § 1627.10, requires employers to “post and keep posted in conspicuous places … the notice pertaining to the applicability of the [ADEA]”). Similarly, the FLSA regulation, 29 C.F.R. § 516.4, requires employers to “post and keep posted a notice explaining the [FLSA] … in conspicuous places[.]” The Court pointed out that the purpose of these requirements is to ensure that those protected under the laws are aware of and able to assert their rights.
The Court further observed that neither the ADEA nor the FLSA imposed statutory penalties for failure to comply with the notice requirements. Cruz at 147 (citing Cortez v. Medina’s Landscaping, Inc., No. 00 C 6320, 2002 WL 31175471, at *5 (N.D.Ill. Sept. 30, 2002) (extending an actual notice tolling rule similar to Vance from the ADEA to the FLSA). “Therefore, 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.” Cruz at 147.
The Court therefore held that its analysis in Vance applied with equal force to the notice requirement of the FLSA. Id.
The Court observed that under Vance, “tolling based on lack of notice continues until the claimant retains an attorney or obtains actual knowledge of her rights.” Cruz at 147 (citing 716 F.2d at 1013). The Fourth Circuit therefore instructed the district court to allow discovery on remand to determine whether Cruz’s FLSA claim was time-barred despite being equitably tolled. Id.
In sum, Cruz held that that the limitations period for FLSA claims can be equitably tolled if the employer failed to post the required notice explaining workers’ rights under the FLSA. The decision is important because it means an employer who fails to post the required notice may lose its ability to assert a statute of limitations defense in FLSA cases.
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