WILLIAM E. BROCK, SECRETARY OF LABOR, PETITIONER V. RICHLAND SHOE COMPANY No. 1520 In the Supreme Court of the United States October Term, 1986 Petition for a Writ of Certiorari to the United States Court of Appeals for the Third Circuit The Solicitor General, on behalf of the Secretary of Labor, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Third Circuit in this case. TABLE OF CONTENTS Question Presented Opinions below Jurisdiction Statutory provision involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-9a) is reported at 799 F.2d 80. The opinion of the district court (App., infra, 10a-17a) is reported at 623 F. Supp. 667. JURISDICTION The judgment of the court of appeals (App., infra, 22a-23a) was entered on August 26, 1986. A petition for rehearing with suggestion for rehearing en banc was denied on October 23, 1986 (App., infra, 24a). On January 12, 1987, Justice Brennan extended the time within which to file a petition for a writ of certiorari to February 20, 1987. On February 11, 1987, Justice Brennan further extended the time for filing a petition to March 10, 1987. On March 5, 1987, Justice Brennan further extended the time for filing a petition to March 19, 1987. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTORY PROVISION INVOLVED Section 6 of the Portal-to-Portal Act of 1947, as amended, 29 U.S.C. 255, provides, in relevant part: Any action commenced on or after May 14, 1947, to enforce any cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938, as amended * * * , the Walsh-Healey Act * * * , or the Bacon-Davis Act * * * -- (a) if the cause of action accrues on or after May 14, 1947 -- may be commenced within two years after the cause of action accrued, and every such action shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued. QUESTION PRESENTED Whether the court of appeals erred in holding that a violation of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. (& Supp. III) 201 et seq., is "willful" within the meaning of the applicable statute of limitations, 29 U.S.C. 255(a), only where the employer, in acting contrary to the statute, knew that, or showed reckless disregard for whether, its conduct was prohibited by the FLSA. STATEMENT 1. a. The Fair Labor Standards Act of 1938 (FLSA or Act), 29 U.S.C. (& Supp. III) 201 et seq., requires that covered employers adhere to certain standards in their compensation of covered employees. In particular, the Act requires the payment of at least the prescribed minimum wage, currently $3.35 an hour (29 U.S.C. 206); the payment of one and one half times the employee's regular rate for overtime hours (29 U.S.C. (& Supp. III) 207); and the payment of equal wages to men and women where required by the Equal Pay Act (29 U.S.C. 206(d)). The Act also requires employers to maintain, and to make available to the Department of Labor, certain wage and hour records (29 U.S.C. (& Supp. III) 211(c)). Any employer is subject to the FLSA's wage and hour requirements with respect to those employees who work in interstate commerce or in the production of goods for interstate commerce. Also covered by the FLSA are all employees of an "enterprise" engaged in interstate commerce or the production of goods for interstate commerce. 29 U.S.C. 206(a), 207(a)(1); see Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290, 295 n.8 (1985). /1/ Where those coverage tests are met, an employer may avoid some or all of the FLSA's requirements for some or all of its employees. The Act includes numerous partial or total exemptions, which Congress has frequently changed over the years, for particular industries or occupations. See 29 U.S.C. 213(a)(1)-(15) (exemptions from minimum wage, overtime, and Equal Pay Act requirements) and (b)(1)-(29) (exemptions from overtime requirements). /2/ Exemptions to the FLSA are construed narrowly, however, and employers bear the burden of proving entitlement to any claimed exemption. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 394 n.11 (1960). The FLSA may be enforced by a criminal prosecution for willfully violating the FLSA's wage and hour requirements, 29 U.S.C. 216(a); by an injunctive suit brought by the Secretary of Labor, for back pay and/or an injunction against future violations, 29 U.S.C. 217; or by suit brought by either the Secretary of Labor or affected employees /3/ to recover unlawfully withheld wages and, presumptively, an equal amount of "liquidated damages," 29 U.S.C. 216(b) and (c). In the non-injunctive civil action, the employer may seek to escape all or part of the liquidated damages liability by proving that the acts or omissions giving rise to its violation were taken in good faith and with reasonable grounds for believing they were lawful under the FLSA. Where such proof is presented, the trial court has discretion to reduce or eliminate the liquidated damages portion of the award. 29 U.S.C. 260. b. As enacted in 1938, the FLSA had no statute of limitations to govern injunctive or non-injunctive actions for unpaid minimum wages, overtime compensation, or liquidated damages. 29 U.S.C. (1940 ed.) 201 et seq. The courts accordingly applied state statutes of limitations to those FLSA actions. See, e.g., Donovan v. Shell Oil Co., 168 F.2d 229 (4th Cir. 1948); Mid-Continent Petroleum Corp. v. Keen, 157 F.2d 310 (8th Cir. 1946); Loggins v. Steel Constr. Co., 129 F.2d 118 (5th Cir. 1942). In 1947, however, Congress enacted, in Section 6(a) of the Portal-to-Portal Act, ch. 52, 61 Stat. 88, a uniform two-year limitations period for such FLSA actions. Congress made extensive revisions in the FLSA in 1966. It increased the minimum wage, tightened exemptions, and expanded coverage to include more than 7 million new workers and approximately 700,000 new establishments. Fair Labor Standards Amendments of 1966, Pub. L. No. 89-601, Tits. II and III, 80 Stat. 833-841. /4/ Congress also changed the statute of limitations to its present version. Section 601(b), 80 Stat. 844. A cause of action for unpaid minimum wages, unpaid overtime compensation, or liquidated damages under the FLSA is now subject to a two-year period, "except that a cause of action aris(ing) out of a willful violation may be commenced within three years." 29 U.S.C. 255(a). /5/ 2. Respondent Richland Shoe Company, a manufacturer of foot-wear and other leather products, employed certain mechanics to repair and to maintain equipment in its plant. These mechanics, though their hours fluctuated from week to week, worked on average more than 40 hours a week. Yet, contrary to the statutory requirement, 29 U.S.C. 207(a), they were paid a weekly salary on a "base week" of 48 hours, and only received one and one-half times regular pay for hours in excess of that base week. App., infra, 13a. a. The Secretary brought suit for an injunction to restrain future violations of the FLSA and to recover back wages for the affected mechanics. App., infra, 2a. The employer defended its noncompliance with the FLSA's overtime requirements (29 U.S.C. 207(a)(1)) by invoking the statutory "Belo plan" exception, which covers certain situations where employees' work hours inescapably fluctuate both above and below 40 hours per week. 29 U.S.C. 207(f); 29 C.F.R. 778.402-778.414; see Walling v. A.H. Belo Corp., 316 U.S. 624 (1942). The district court granted summary judgment to the Secretary, agreeing that respondent's compensation system was not a valid Belo plan, because the mechanics' hours did not fluctuate significantly below 40 hours a week. App., infra, 14a. /6/ Having found an FLSA violation, the district court also agreed with the Secretary that respondent's violation was "willful," so that the mechanics were entitled to three rather than two years' back wages. The court looked to the admission of respondent's vice president and general manager that he was aware that the FLSA governed overtime systems such as the one used for the mechanics, and applied the Fifth Circuit's standard for determining willfulness, which "requires nothing more than that the employer has an awareness of the possible application of the FLSA" (App., infra, 15a). See Coleman v. Jiffy June Farms, Inc., 458 F.2d 1139, 1142 (5th Cir. 1971), cert. denied, 409 U.S. 948 (1972) ("the employer knew or suspected that his actions might violate the FLSA. Stated more simply, we think the test should be: Did the employer know the FLSA was in the picture?") Brennan v. Heard, 491 F.2d 1, 3 (5th Cir. 1974) (emphasis in original) (an employer acts willfully "if he knows, or has reason to know, that his conduct is governed by the (FLSA)"). The court enjoined future violations and ordered back pay. App., infra, 16a. b. The court of appeals affirmed the district court's conclusion that respondent violated the FLSA, rejecting as "totally without merit" respondent's contentions that its plan met the Belo requirements and that the injunctive relief was inequitable. App., infra, 3a n.2. Nevertheless, the court of appeals vacated the district court's award of back pay, ruling that the district court had applied an incorrect standard of willfulness under 29 U.S.C. 255(a). App., infra, 3a n.2. The court of appeals held that the standard applied by the district court was "wrong because it is contrary to the plain meaning of the FLSA." App., infra, 5a. The court found it "clear that willfulness is akin to intentionality," which the court ruled, at a minimum "requires reckless disregard" of consequences. Ibid. The court stated that it knew of no legislative history sufficient to establish a congressional intent contrary to this plain meaning and that the remedial purposes of the FLSA were insufficient reason to contradict the plain meaning. Id. at 6a, 8a-9a. Further, the court reasoned, the standard used by the district court would make virtually all violations willful and thus would circumvent the two-tiered scheme of liability that Congress intended. Id. at 6a. The court of appeals also relied on this Court's recent decision in Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 125-126 (1985). The Court there construed the "willful violation" prerequisite to an award of liquidated damages under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. 626(b), holding that the provision required a knowing violation of, or reckless disregard for, the requirements of the ADEA. The court of appeals characterized Thurston as involving "a context very similar to the one at issue here." App., infra, 7a. It acknowledged a conflict among the circuits on the meaning of "willful" in the FLSA statute of limitations, noting the Seventh Circuit's decision in Walton v. United Consumers Club, Inc., 786 F.2d 303 (1986), which adopted the Thurston standard (see App., infra, 4a n.4, 6a, 7a-8a), and the acceptance by other courts of appeals of the standard applied by the district court in this case (id. at 4a n.4). /7/ The court of appeals thus concluded that the three-year limitations period for an FLSA "willful violation" applies only if the employer "knew or showed reckless disregard for the matter of whether its conduct was prohibited by the FLSA" (id. at 8a (emphasis deleted)). The court of appeals, with Judge Gibbons dissenting, subsequently denied the government's petition for rehearing. App., infra, 24a. REASONS FOR GRANTING THE PETITION The courts of appeals are in sharp conflict on the correct standard for determining when a violation of the FLSA is "willful" within the meaning of the statute of limitations governing civil actions to recover unlawfully withheld wages. The actual knowledge/reckless disregard standard adopted by the Third Circuit in this case and by the Seventh Circuit in Walton v. United Consumers Club, Inc., supra, conflicts with more encompassing standards articulated by every other circuit except the Federal Circuit, which has not addressed the question. This lack of uniformity subjects employers in similar circumstances to differing periods of liability solely on the basis of their location. It also creates confusion about the types of information the Secretary of Labor must gather in pending and future investigations into FLSA violations. In addition, we think the decision by the court of appeals in this case is incorrect. Certiorari is warranted to resolve the conflict and to correct the court of appeals' unduly restrictive construction of the FLSA statute of limitations. 1. The Third Circuit in this case and the Seventh Circuit in Walton both have interpreted the term "willful violation" as used in the FLSA limitations provision, 29 U.S.C. 255(a), to refer only to conduct that is knowingly or recklessly in violation of the law. Ten other courts of appeals have adopted more encompassing interpretations. Most courts have adopted something close to the standard articulated by the Ninth Circuit in EEOC v. First Citizens Bank, 758 F.2d 397, 401, cert. denied, 474 U.S. 902 (1985): a violation is willful within the meaning of the limitations provision if the "employer knew, or should have known, that there was an appreciable possibility that the employees involved were covered by the Act." See Nolting v. Yellow Freight System, Inc., 799 F.2d 1192, 1197, 1198 (8th Cir. 1986) (employer "knew or suspected" that its practices violated statutory requirements); Crenshaw v. Quarles Drilling Corp., 798 F.2d 1345, 1350 & n.6 (10th Cir. 1986) (citations omitted) ("violation is willful if 'the employer knew that the Act was "in the picture" and was aware of the Act's possible application to his employees'"); Donovan v. Bel-Loc Diner, Inc., 780 F.2d 1113, 1117 (4th Cir. 1985) (violation is willful when employer knew FLSA was "'in the picture' and, thus, might govern the employer's conduct"); Secretary of Labor v. Daylight Dairy Products Inc., 779 F.2d at 789 (citation omitted) ("'the employer knew or had reason to know that the FLSA was applicable to its employment practices'"); Brock v. Georgia Southwestern College, 765 F.2d 1026, 1039 (11th Cir. 1985) (employer "knew that the Act was 'in the picture' regardless of the defendant's good faith"); Donovan v. Carls Drug Co., 703 F.2d 650, 652 (2d Cir. 1983) ("(1) (employers) know that their business is subject to FLSA and (2) their practices do not conform to FLSA requirements"); Donovan v. KFC National Management Co., 682 F.2d 603, 605 (6th Cir. 1982) (citation omitted) ("'an employer who knows he may be subject to the (FLSA) and proceeds voluntarily to engage in conduct which he knows may violate the (FLSA) has done so willfully'"); Coleman v. Jiffy June Farms, Inc., 458 F.2d at 1142 ("the employer knew or suspected that his actions might violate the FLSA. Stated more simply, we think the test should be: Did the employer know the FLSA was in the picture?"). /8/ The District of Columbia Circuit articulated a different standard in Laffey v. Northwest Airlines, Inc., 567 F.2d 429 (1976), cert. denied, 434 U.S. 1086 (1978) (Laffey I). The court of appeals there stated (id. at 461-462 (footnote omitted)) that an employer's noncompliance is willful "(a)t the very least * * * when he is cognizant of an appreciable possibility that he may be subject to the statutory requirements and fails to take steps reasonably calculated to resolve the doubt." See also Laffey v. Northwest Airlines, Inc., 740 F.2d 1071, 1085-1087 (D.C. Cir. 1984), cert. denied, 469 U.S. 1181 (1985) (Laffey II) (standard reaffirmed). /9/ Since this Court's decision in Thurston, the Third /10/ and Seventh Circuits have applied the actual knowledge/reckless disregard standard in the statute of limitations context, while six courts of appeals have refused to do so. Three -- the First, Fourth, and Tenth Circuits -- have expressly found the Thurston standard not applicable to the FLSA statute of limitations. Crenshaw, 798 F.2d at 1350 n.6; Bel-Loc Diner, Inc., 780 F.2d at 1117; Daylight Dairy, 779 F.2d at 789. Two others -- the Ninth and Eleventh Circuits -- have applied their pre-Thurston standard without discussing Thurston. First Citizens Bank, 758 F.2d at 401; Georgia Southwestern College, 765 F.2d at 1039. The Eighth Circuit adopted the appreciable possibility standard for the first time after Thurston was decided. Nolting, 799 F.2d at 1197, 1198. /11/ The federal government has itself taken different positions on the proper interpretation of "willful violation" as used in the FLSA statute of limitations. For example, in this case and in others, the Secretary of Labor has pressed the appreciable possibility standard. By contrast, in Hickman v. United States, supra, the United States argued for adoption of the Thurston standard where the government is the employer. See 10 Cl. Ct. at 553. The conflict in the courts on this issue requires resolution by this Court. 2. Contrary to the reasoning of the court of appeals, neither the word "willful" nor the phrase "willful violation" has a plain meaning that is consistent from statute to statute. Rather, as this Court has repeatedly recognized, "willful" is a word "of many meanings, its construction often being influenced by its context." Spies v. United States, 317 U.S. 492, 497 (1943); see Screws v. United States, 325 U.S. 91, 101 (1945) (opinion of Douglas, J.); United States v. Murdock, 290 U.S. 389, 394-395 (1933). Thus, in numerous cases construing "willful" or "willful violation," the Court has carefully examined the particular statutory scheme at issue to determine which meaning was required by that scheme. See, e.g., United States v. Bishop, 412 U.S. 346, 360-361 (1973); Screws v. United States, 325 U.S. at 101; Spies v. United States, 317 U.S. at 497-498; Browder v. United States, 312 U.S. 335 (1941); United States v. Illinois Central R.R., 303 U.S. 239, 242-244 (1938); United States v. Murdock, 290 U.S. at 394-395. Accord, United States v. Perplies, 165 F.2d 874, 876 (7th Cir. 1948) ("The context of the statute in which the word 'wilful' is used is often most important."). As the court of appeals noted, "willful" refers to an intentional state of mind, but the object of the intent -- what exactly must be intended -- varies from context to context. In some criminal statutes, the term means "with evil purpose, criminal intent or the like." See United States v. Illinois Central R.R., 303 U.S. at 242. In other criminal statutes, an intent to do evil is not required. See, e.g., Fields v. United States, 164 F.2d 97, 99-100 (D.C. Cir. 1947), cert. denied, 332 U.S. 851 (1948); American Surety Co. v. Sullivan, 7 F.2d 605, 606 (2d Cir. 1925) (L. Hand, J.). In a variety of criminal statutes, all that is required is that "the act was deliberate, voluntary and intentional as distinguished from one committed through inadvertence, accidentally or by ordinary negligence." Nabob Oil Co. v. United States, 190 F.2d 478, 480 (10th Cir.), cert. denied, 342 U.S. 876 (1951) (footnote omitted). Thus, even in criminal statutes, the term has sometimes been interpreted to mean "no more than that the person charged with the duty knows what he is doing. It does not mean that, in addition, he must suppose that he is breaking the law." American Surety Co. v. Sullivan, 7 F.2d at 606. Indeed, under a predecessor statute to the FLSA, this Court has held that an employer may be convicted of "intentionally violat(ing)" a wage and hour law merely by intending to do what the law forbids, even though the employer is ignorant of the law's requirements. Ellis v. United States, 206 U.S. 246 (1907) (Holmes, J.). The meaning of "willful" or "willful violation" likewise varies in civil statutes. For example, in the context of the Securities Exchange Act of 1934 provision authorizing administrative measures, including revocation of registration, against brokers and dealers who have "willfully violated" specified laws (15 U.S.C. (Supp. III) 78o(b)(4)(D)), it has long been generally accepted that "'(a)ll that is required is proof that the broker-dealer acted intentionally in the sense that he was aware of what he was doing.'" Arthur Lipper Corp. v. SEC, 547 F.2d 171, 180 (2d Cir. 1976), cert. denied, 434 U.S. 1009 (1978) (Friendly, J.) (quoting 2 L. Loss, Securities Regulation 1309 (1961)). /12/ In other civil statutes, such as some state statutes penalizing an employer's willful failure to pay wages in a timely manner as required by law, "willful" has similarly been interpreted to mean only '"(t)hat the person knows what he is doing, intends to do what he is doing, and is a free agent.'" State v. Johnston, 233 Or. 103, 108, 377 P.2d 331, 333 (1962) (quoting Davis v. Morris, 37 Cal. App. 2d 269, 274, 99 P.2d 345, 348 (1940)). In still other civil statutes whose purpose is not to penalize, but rather to compensate employees for injury, courts have sometimes held an employer liable for willfully violating a statute where he neither knows nor is reckless in failing to know of the violation. E.g., Kennerly v. Shell Oil Co., 13 Ill. 2d 431, 439, 150 N.E.2d 134, 139 (1958) (employer is liable for "willful violation" of Illinois' Scaffold Act, Mining Act, and Occupational Disease Act of 1911, whether or not he was reckless or the violation was known to him, "when by the exercise of reasonable care the existence of such dangerous conditions (producing the injury) could have been discovered and become known to him"). In short, neither the word "willful" nor the phrase "willful violation" has a single meaning readily discernible apart from the particular statute in which it is used. Thus, the court of appeals was mistaken in its view that the plain meaning of the phrase "willful violation" in the FLSA limitations provision requires adoption of the actual knowledge/reckless disregard standard. The appropriate interpretation of "willful violation" can be determined only by examining the context of the FLSA limitations provision. 3. The standard we think appropriate is based on the District of Columbia Circuit decision in Laffey I, supra. Under the Laffey standard, a violation is willful for FLSA limitations purposes if the employer "is cognizant of an appreciable possibility that he may be subject to the statutory requirements and fails to take steps reasonably calculated to resolve the doubt" (567 F.2d at 462). In our view, an employer's violation should be held willful if the employer, recognizing it may be covered by the FLSA, acts without a reasonable basis for believing that it is complying with the statute -- either because it fails to seek a reliable determination of its obligations under the FLSA, or because the advice it receives affords no reliable basis for eliminating existing uncertainties about the employer's compliance. This standard, we think, is more consonant with the intent behind the FLSA and its limitations provision than either the actual knowledge/reckless disregard standard or the appreciable possibility standard. The FLSA was enacted for broadly remedial purposes and has long been interpreted generously towards employees. See, e.g., Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. at 296; Mitchell v. Robert DeMario Jewelry, Inc., 361 U.S. 288, 292 (1960); Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 706-707 (1945); Tennessee Coal, Iron & R.R. v. Muscoda Local 123, 321 U.S. 590, 597 (1944); Overnight Motor Transportation Co. v. Missel, 316 U.S. 572, 576, 578 (1942). This broad purpose generally supports placing on employers, rather than on employees, the risk of error in failing to comply with FLSA requirements. As the District of Columbia Circuit noted in Laffey I (567 F.2d at 461), there is "no good reason for translating the employer's error into a loss of pay for the employee." On the other hand, the FLSA limitations provision, which took its present form in the Fair Labor Standards Amendments of 1966, Pub. L. No. 89-601, 80 Stat. 830 et seq., clearly creates two tiers of liability. And while there is no mention of the provision in the committee reports or floor debates on the 1966 Amendments (see, e.g., S. Rep. 1487, 89th Cong., 2d Sess. (1966); H.R. Conf. Rep. 2004, 89th Cong., 2d Sess. (1966); H.R. Rep. 1366, 89th Cong., 2d Sess. (1966)), there is reason to believe that Congress was attempting to distinguish between those employers who had good reason to think they were in compliance with the FLSA and those who did not. /13/ As the District of Columbia Circuit stated in Laffey I (567 F.2d at 460 (footnotes omitted)), "(t)here is ample room * * * for an informed belief that, with the (1966) amendments' broad expansion of the Act's coverage and resultant concern over the effect on small businessmen, an unqualified increase of the limitation period would bear too heavily upon an inevitably larger group of excusably inadvertent violators." See Laffey II, 740 F.2d at 1085-1087 (court reaffirms its previous analysis of legislative history). Given this background, we think the actual knowledge/reckless disregard standard should not be transplanted from the ADEA liquidated damages provision to the FLSA limitations provision. In Thurston, the Court found the ADEA provision to be punitive in intent, relying on its origin in the 90th Congress as a substitute for a criminal penalty provision. See 469 U.S. at 125-126. By contrast, there is no indication that the FLSA limitations provision -- enacted by a previous Congress (the 89th) as part of a different statute /14/ -- was intended to be punitive. Moreover, whereas in the Thurston context the willfulness determination affects only non-compensatory liquidated damages, the consequences of the willfulness determination under the FLSA limitations provision are broader, and include determination of how much, if any, compensatory back pay employees are to receive. In light of this effect of the limitations provision on compensatory relief, the broadly remedial purpose of the FLSA as a whole, and the indications that Congress's purpose was to cushion the impact of liability only on those employers who reasonably believed they were in compliance, we think that something short of actual knowledge or recklessness is sufficient to require the employer to bear the risk of error. An employer's failure to exercise reasonable care in determining its obligations, or its receipt of advice that does not afford a reliable basis for the employer to be confident that it is in compliance, should render the employer's violation of the FLSA willful for purposes of the FLSA statute of limitations. If the actual knowledge/reckless disregard standard gives too little recognition to the employee-protection policies behind the FLSA, the appreciable possibility standard, at least in its most common formulations, gives too little effect to Congress's express intent to create two tiers of liability in the FLSA limitations provision. Among employers eventually found to have violated the FLSA, there are probably few who cannot be charged with awareness that there was an appreciable possibility that they were covered by the statute. Moreover, the appreciable possibility standard might work to employees' disadvantage: by deeming a violation willful regardless of any legal advice received, this standard reduces employers' incentive to seek reliable legal advice once they are aware that the FLSA is in the picture. The standard we propose avoids both of those problems. It does not collapse into a single tier of liability; and as Congress apparently intended, it encourages responsible efforts by employers and protects those employers who reasonably rely on sound assurances that they are in compliance with the statute. /15/ For these reasons, the court below erred in requiring that an employer act with a specific intent to violate the FLSA or with "reckless disregard" of statutory requirements before the three year limitations period for willful violations may apply. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. CHARLES FRIED Solicitor General DONALD B. AYER Deputy Solicitor General RICHARD G. TARANTO Assistant to the Solicitor General GEORGE R. SALEM Solicitor of Labor ALLEN H. FELDMAN Associate Solicitor for Special Appellate and Supreme Court Litigation MARY-HELEN MAUTNER Counsel for Appellate Litigation EDWARD D. SIEGER Attorney MARCH 1987 /1/ A business is subject to "enterprise" coverage if it (i) meets the complex statutory definition of "enterprise," which excludes specified industries (29 U.S.C. 203(r)); (ii) has employees with certain connections to interstate commerce (29 U.S.C. 203(s)); and (iii) either has an "annual gross volume of sales made or business done" that is above certain specified amounts or is engaged in certain specified types of activity (e.g., a laundry business, construction, education) (ibid.). /2/ For example, neither the minimum wage nor overtime requirements of the Act generally apply to employees who work in "a bona fide executive, administrative, or professional capacity" or "in the capacity of outside salesman" (29 U.S.C. 213(a)(1)). The Equal Pay Act (29 U.S.C. 206(d)) remains applicable to employees who come within this exemption. See 29 U.S.C. 213(a). /3/ The right of employees to file suit on their own behalf terminates when the Secretary sues, either to recover unpaid wages and liquidated damages or to enjoin future violations and to recover back pay. 29 U.S.C. 216(b) and (c). /4/ See S. Rep. 1487, 89th Cong., 2d Sess. 2 (1966) (new workers); H.R. Rep. 1366, 89th Cong. 2d Sess. 18 (1966) (new workers); Wage and Hour and Public Contracts Divisions, U.S. Dep't of Labor, Minimum Wage and Maximum Hours Standards under the Fair Labor Standards Act, Submitted to the Congress -- 1968, at 27 (increase in number of employers). /5/ This amended statute of limitations applies to causes of action under the Equal Pay Act, which is part of the FLSA (29 U.S.C. 206(d)(3)). It also applies by its terms to causes of action under the Walsh-Healey Act (41 U.S.C. (& Supp. III) 35 et seq.) and the Davis-Bacon Act (40 U.S.C. 276a et seq.). 29 U.S.C. 255(a). In addition, the statute of limitations applies to causes of action under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. (& Supp. III) 621 et. seq. See 29 U.S.C. 626(e)(1). Throughout this petition, we refer to the limitations provision as the FLSA statute of limitations. /6/ The court did not reach the "other substantial grounds asserted" by the Secretary in support of his argument that the plan was invalid. App., infra, 14a n.2. /7/ The court also noted that the First Circuit in Secretary of Labor v. Daylight Dairy Products, Inc., 779 F.2d 784 (1985), had refused to extend Thurston to the FLSA statute of limitations on the ground that the double damages provision construed in Thurston is punitive, while the FLSA statute of limitations provision is not. The court rejected the First Circuit's analysis on the ground that increasing an employer's risk of liability for a "willful" violation "cannot be explained as anything else but a punitive measure." App., infra, 8a. /8/ Although the formulations quoted above differ in certain respects, the courts have generally viewed these formulations as representing a single standard, which we will refer to as the "appreciable possibility" standard. Because the standard was first articulated in Coleman v. Jiffy June Farms, Inc., 458 F.2d at 1142, it has frequently been referred to as the Jiffy June standard. /9/ In Hickman v. United States, 10 Cl. Ct. 550, 554 (1986), the Claims Court stated that the appreciable possibility standard made sense for private employers but not for the federal government as an employer. An FLSA violation by the government, the court held, is non-willful whenever there is significant uncertainty about the FLSA's application. /10/ It is possible that the Third Circuit will apply an even stricter construction of "willful" in some cases. In a case interpreting the "willful" standard under the liquidated damages provision of the ADEA, the court recently held that in cases where employer action "consists of a decision directed at an individual," instead of the adoption of a policy, proof of some "outrageous" conduct is required. See Dreyer v. Arco Chemical Co., 801 F.2d 651, 656-657 (3d Cir. 1986), cert. denied, No. 86-1062 (Mar. 2, 1987). /11/ The remaining four circuits with standards broader than the actual knowledge/reckless disregard standard (the Second, Fifth, Sixth, and District of Columbia Circuits) have not decided a willfulness case since Thurston. Accordingly, the standards articulated in Carl's Drug (Second), Jiffy June (Fifth), KFC (Sixth), and Laffey (District of Columbia) remain the governing law in those circuits. /12/ Likewise, under the criminal penalty provision of the Securities Exchange Act of 1934, 15 U.S.C. (Supp. III) 78ff(a), although a wrongful purpose is required, an individual may be convicted of a willful violation of the Act, or of a rule or regulation promulated under the Act, even if the person had no knowledge of the legal prohibition. See United States v. Dixon, 536 F.2d 1388, 1395-1398 (2d Cir. 1976) (Friendly, J.); United States v. Schwartz, 464 F.2d 499, 509-510 (2d Cir.), cert. denied, 409 U.S. 1009 (1972). /13/ The 1966 Amendments originated in a bill proposed by the Administration (111 Cong. Rec. 10793 (1965)), which not only would have greatly extended coverage, raised the minimum wage, and tightened exemptions, but also would have extended the FLSA statute of limitations to three years for all violations. See Minimum Wage-Hour Amendments, 1965: Hearings on H.R. 8259 Before the General Subcomm. on Labor of the House Comm. on Education and Labor, 89th Cong., 1st Sess. 7 (1965). Hearings on the bill were conducted by the House Labor Subcommittee. Members of Congress and various employers expressed concern about the impact of the proposed amendments on small businesses; they also complained, citing the expansion of coverage and the complexity of the FLSA's coverage provisions, that the three-year statute of limitations would be unfair to many employers who had good reason for believing (mistakenly) that they were in compliance. See, e.g., id. at 394, 533-534, 980, 1014, 1151, 1118-1119, 2050, 2059, 2076-2077, 2241-2242, 2249-2250); see also S. Rep. 1487, supra, at 75-77. The bill reported from the House Labor Subcommittee, H.R. 10275, 89th Cong., 1st Sess. (1965), contained the two-tier limitations provision that was subsequently enacted. There was no accompanying explanation of the change from the Administration bill. As noted above, there was likewise no explanation of the provision in the rest of the legislative process. /14/ In its brief on the merits in Thurston, the United States mistakenly suggested that the two provisions were adopted by the same Congress (Br. at 33). In accord with this suggestion, the United States, in arguing that the then-uniformly accepted appreciable possibility construction of willfulness under the statute of limitations provision, 29 U.S.C. 255, should be applied to Section 7(b) of the ADEA, 29 U.S.C. 626(b), also relied on the "'natural presumption that identical words used in different parts of the same Act are intended to have the same meaning'" (Br. at 33 (citation omitted)). This Court rejected our reading of the ADEA provision but reserved the question of the proper interpretation of the FLSA limitations provision. Thurston, 469 U.S. at 127-128. As noted above, the FLSA limitations provision, though applicable in ADEA actions (29 U.S.C. 626(e)), was enacted by a different Congress from that which enacted the ADEA; and whereas this Court held in Thurston that the ADEA liquidated damages provision is punitive in intent, the FLSA limitations provision is not. For those reasons, and for the others set forth above, the statutory context relevant to interpreting the FLSA limitations provision is different from that which was at issue in Thurston, and the result should accordingly be different. /15/ Indeed, an employer may seek from the Wage and Hour Division of the Department of Labor an opinion on the application of the FLSA to a specified set of facts. See App., infra, 16a. Reliance on such an opinion in certain circumstances protects the employer against any liability. 29 U.S.C. 259(a); 29 C.F.R. 790.13-790.19. In addition, several courts of appeals following the "appreciable possibility" standard have stated that, even if an employer does not qualify for this immunity from liability, good faith reliance on a government opinion may be a defense to the charge that a violation was willful. See Marshall v. Root's Restaurant, Inc., 667 F.2d 559, 561 (6th Cir. 1982); Marshall v. Union Pacific Motor Freight Co., 650 F.2d 1085, 1092-1093 (9th Cir. 1981). APPENDIX