A claim that a local construction company's wage practices violated the Fair Labor Standards Act (FLSA) can proceed to trial, according to a Hawaii federal court decision.  In Secretary of Labor v. Kazu Construction, LLC, the United States District Court for the District of Hawaii held that there are genuine issues of fact regarding whether the employer's actions amounted to a "willful violation" of law such that a three-year statute of limitations should apply to the case.

 

While a two-year statute of limitations normally applies to FLSA claims, the limitations period may be extended to three years where the cause of action arises out of a "willful violation" of law.  A "willful violation" may be found where an employer is aware of its FLSA obligations but takes no action to ensure compliance with them.

 

In this case, Kazu Construction was operating as the contractor for developing the Makaha Oceanview Estates when a former employee filed a complaint with the Hawaii Department of Labor and Industrial Relations seeking unpaid wages.  The DLIR directed the worker to the DOL to investigate his overtime compensation concerns.  The DOL's investigation uncovered evidence suggesting that Kazu Construction had been banking overtime hours instead of paying them, and had failed to maintain adequate payroll records.  The agency filed suit based upon these allegations, and the employer filed a motion for summary judgment seeking dismissal, in part, due to the cause of action arising prior to the two-year statute of limitations period.  The DOL argued that a three-year statutory period should apply because the employer's actions constituted a "willful violation."

 

In concluding that summary judgment was not proper because the statute of limitations had run, Judge Kay disagreed with the employer's argument that there were no genuine issues of fact regarding whether a three-year statutory period should apply.  The court reasoned that where Kazu Construction had informed employees that it did not want them to work any overtime, the company also had an affirmative obligation to monitor and address the issue with any workers performing overtime work.  Evidence showed that the employer was aware of its obligation to document and pay overtime, that management informed employees that any overtime earned would be banked instead of paid, and that managers created and used inaccurate timesheets to process wage payments.  Such evidence was sufficient to create a genuine issues of material fact regarding whether the employer's actions amounted to a "willful violation" that would justify application of a three-year statute of limitations in this case.