4th Circuit’s decision underscores importance of posting employment notice
FosterThomas, Inc -By Kevin C. McCormickVirginia employment law
Most employers know that to fully comply with all the federal and state employment laws, they must post specific employee notices in the workplace. Indeed, many companies specialize in providing state-specific posters that include all of the required notices for each state. Occasionally, however, an employer fails to post a required notice in the workplace and does not realize its mistake until a lawsuit is filed. By then, it is often too late to remedy the problem.
A recent decision from the U.S. 4th Circuit Court of Appeals—which covers Maryland, North Carolina, South Carolina, Virginia and West Virginia—underscores the importance of making sure that required posters are in the appropriate workplace locations and are up to date. Failing to display a poster can result in a court allowing an otherwise time-barred claim to proceed.
Cristina Fernandez Cruz is a citizen of the Philippines, where she lived until 2002. She speaks Tagalog fluently but speaks limited English. In 2001, a friend told Cruz about an opportunity to travel to the United States to work for Nilda J. Maypa, an employee of the World Bank. Cruz submitted a résumé, and Maypa hired her soon after.
About a month later, Maypa faxed Cruz an employment contract that stated that Cruz would be employed as a domestic employee at Maypa’s residence for 2 years at $6.50 per hour. The contract stated that Cruz would work between 35 and 40 hours per week, have at least one full day off each week, accumulate two sick days per year, receive heavily subsidized medical insurance, and receive full compensation for her travel to and from the Philippines.
Cruz reviewed the contract with friends who were more fluent in English. However, before Cruz could sign the agreement, Maypa informed her over the phone that she would pay her only $250 per month rather than the $6.50 per hour specified in the contract. Cruz did not know that U.S. law required that she be paid a significantly higher wage. She signed the contract on January 17, 2002. On March 17, 2002, she left the Philippines and flew to the United States.
Soon after Cruz arrived in Virginia, it became clear that Maypa had misrepresented her working and living conditions. Cruz was required to work 17 to 18 hours per day 7 days per week, and she was expected to remain on call at night. She was not allowed to take a day off during the 6 years she remained under Maypa’s control, even when she was ill.
When Cruz arrived in the United States, eight people lived in Maypa’s house. Cruz was expected to cook, do laundry for the entire family, and clean the four-bedroom, three-bathroom home. She was also expected to provide 24-hour care for four children and maintain the property by mowing the lawn, trimming trees, shoveling snow, cleaning the pool, and performing other landscaping duties.
Although Cruz was initially paid $250 per month, by the time she escaped 6 years later, she was making $450 per month, which amounted to about $15 per day. Maypa executed two contract extensions during Cruz’s employment. Both extensions called for higher wages and benefits Cruz never received.
Maypa told her that the documents were “a formality” to keep her “safe.” Maypa told Cruz that she would be “hunted down,” imprisoned, and deported if she tried to leave. On January 17, 2008, Cruz gathered all the papers she could find related to her employment and immigration status and left.
On July 16, 2013, 5 years after she left, Cruz filed a lawsuit in federal district court seeking compensatory and punitive damages for violations of the Victims of Trafficking and Violence Protection Act (VTVPA) and the Fair Labor Standards Act (FLSA). Maypa asked the court to dismiss Cruz’s claims as time-barred since she filed the lawsuit more than 5 years after she left her employ. The district court granted Maypa’s motion and dismissed the claims. Cruz appealed that decision to the 4th Circuit.
4th Circuit’s decision
On appeal, Cruz argued that her VTVPA claim should be subject to the 10- year statute of limitations that was added to the law in 2008. She also claimed that her FLSA claim should be equitably tolled (extended) since she did not receive a notice of her rights under the FLSA because Maypa never posted the required signage in her home.
In considering Cruz’s claims, the 4th Circuit acknowledged that at the time Maypa allegedly violated the VTVPA, the Act was governed by a 4- year statute of limitations. However, in 2008, Congress amended the VTVPA to include a 10-year statute of limitations. The 4th Circuit found that the longer statute of limitations should retroactively apply to Cruz’s claims.
According to the 4th Circuit, equitable tolling is appropriate in two circumstances: (1) when a plaintiff is prevented from asserting her claims by wrongful conduct on the part of the defendant and (2) when extraordinary circumstances beyond the plaintiff’s control make it impossible for her to file the claims in time. The appellate court found that the district court erred in dismissing Cruz’s claims. Instead, her VTVPA claims were sent back to the district court for discovery (pretrial fact-finding) to determine whether the claims should be equitably tolled.
In addition to her VTVPA claims, Cruz alleged that Maypa willfully violated the FLSA by failing to pay her the required minimum wage. Although the district court applied the correct statute of limitations for willful FLSA violations (3 years instead of the normal 2), it found that Cruz’s claims should not be equitably tolled because she failed to show that there were extraordinary circumstances.
The 4th Circuit disagreed and found that equitable tolling was appropriate in this case. In reaching that conclusion, the court relied on an earlier decision, Vance v. Whirlpool Corp. In that case, the court held that the Age Discrimination in Employment Act’s (ADEA) previous filing requirement should be tolled because of the employer’s failure to post a notice of workers’ rights under the Act.
The notice requirements in the ADEA and the FLSA are almost identical. Both laws require employers to post in a conspicuous place a notice pertaining to the laws’ applicability to ensure that employees protected by the statutes are aware of and are able to assert their rights.
The Vance decision tolled an administrative filing deadline rather than a statute of limitations, but the FLSA lacks an equivalent administrative filing requirement. Thus, like an administrative filing deadline, the FLSA’s deadline to sue is the critical juncture at which an employee’s rights are preserved or lost.
Neither the ADEA nor the FLSA inflicts statutory penalties for failing to comply with the notice requirements. Therefore, absent a tolling rule, employers would have no incentive to post notices since they could hide their violations from employees until any relevant claims expired.
Under the Vance decision, tolling based on a lack of notice continues until the employee retains an attorney or obtains knowledge of her rights. The 4th Circuit sent Cruz’s FLSA claim back to the district court. Since the record did not say when Cruz retained an attorney or obtained knowledge of her rights, the district court should allow discovery to determine whether her FLSA claim was time-barred despite being equitably tolled. Cruz v. Maypa et al, 4th Circuit, No. 13-2363, decided December 1, 2014.
This decision serves as a reminder to make sure that all of the required employment posters are appropriately displayed in your workplace and updated as needed. If that is not done, a disgruntled employee may be given more time than the standard 2 or 3-year statute of limitations to file a claim for FLSA violations.
As the 4th Circuit noted, equitable tolling is appropriate when (1) wrongful conduct on the part of the employer prevents an employee from asserting her claims and (2) extraordinary circumstances beyond the employee’s control make it impossible for her to file the claims on time.
While equitable tolling is available only when an employee has exercised due diligence in preserving her legal rights, courts may be inclined to extend the applicable statute of limitations because of an employer’s failure to post the notice required by the FLSA.
In this case, Cruz’s claims, which were filed five years after she left Maypa’s employ, may very well be considered timely because of her employer’s failure to display the appropriate posters in the workplace. Considering how simple it is to obtain the appropriate poster, this problem can be easily avoided.