Under the Fair Labor Standards Act, in addition to recovery of back pay for unpaid wages or overtime, the law allows an award of "liquidated damages" (i.e., the damages are doubled) unless the employer "shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith." In addition, "willful" violations of the statute carry a three-year statute of limitations rather than a two-year one. A combination of these two circumstances can, therefore, convert a $100,000-per-year back pay exposure from $200,000 to $600,000 - hardly an academic exercise. And although the burden of showing good faith rests on the employer as a defense but the need to prove wilfillness for limitations purposes is a plaintiff's task, the actual application of the two concepts has often yielded similar results.
Until 1988, the employer could not profess to have acted in a non-willful manner if it knew the statute was "in the picture." This rule, established in the 1972 decision in Coleman v. Jiffy June Farms, was changed by the Supreme Court's opinion in McLaughlin v. Richland Shoe, which held that willfullness requires either that the employer knew its conduct violated the Act or that it acted in reckless disregard of its statutory compliance obligations.
A recent opinion from the same court which decided Jiffy June Farms nearly 40 years ago rejected a district court ruling that an employer's misclassification of several different groups of employees and trainees had been willful. The plaintiff had to prove willfulness and failed to do so, the appeals court concluded; "the district court conflated the willfullness analysis with the 'lack of good faith" analysis". The "substantial burden" the employer shows in proving its good faith in order to avoid liquidated damages is not the same as the onus upon the plaintiff to prove willfullness, and the two rules, although similar in concept, are totally unrelated. Stokes v. BWXT Pantex LLC, 17 WH Cas. (BNA) 1035 (5th Cir., May 4, 2011)(unpublished). Consequently, the conventional wisdom is neither conventional nor wise.
And if that's clear, perhaps we'll talk soon about the circumstances in which an "independent" contractor isn't independent; the willfullness issue is a breeze by comparison.