HENDERSON, Senior Circuit Judge:
The Secretary of Labor ("Secretary") appeals from the judgment of the United States District Court for the Middle District of Alabama finding in favor of the Alabama Department of Conservation and Natural Resources ("Department") in this action filed by the Secretary pursuant to the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. §§ 201-219. The issues on appeal are confined to whether the Department had actual or constructive knowledge of FLSA violations and, if so, whether the claims are subject to a two-year or a three-year statute of limitations. We affirm in part and reverse in part and remand for further proceedings consistent with this opinion.
The Secretary brought this action against the Department in August 1990, alleging infractions of the overtime and record-keeping provisions of the FLSA.
On appeal, the Secretary contends that the district court erred by finding that the Department had no constructive knowledge of the officers' overtime work. The Secretary also urges that the Department's violations were "willful" and that, consequently, the claims are subject to the three-year statute of limitations.
II. THE DISTRICT COURT'S FINDINGS
The following facts found by the district court are not in dispute. The Law Enforcement Section of the Game and Fish Division of the Department is charged with enforcing the game and fish laws of the State of Alabama. It is divided into twelve districts, each with one captain, one lieutenant and a varying number of officers. The officers, who work independently out of their homes, are required to answer citizens' complaints referred to them at all hours of the day and
Because the officers work independently, the Department relies on their written reports to keep track of the number of their working hours. Every week each officer fills out a form on which he records the hours he spends on his enforcement duties (the "weekly report"), as well as an arrest report. These documents are mailed to the officer's district captain, who reviews them for completeness and accuracy, and then forwards them to the Department's Montgomery office for examination by the Department's chief. The officers have direct contact with their supervisors at monthly district meetings and occasionally work with their captains or lieutenants out in the field.
In 1975, the Alabama legislature enacted a law requiring the State to pay law enforcement officers one and one-half times their normal rate of pay for "[h]ours worked in excess of 40 in any calendar week."
In 1983, Officer William Foley filed suit against the Department seeking unpaid overtime compensation pursuant to the Alabama overtime law. The Department denied that Foley had actually worked overtime hours, but eventually settled the case. As a result of this lawsuit, the Department began using a new weekly report form which advised that officers were not allowed to work more than forty hours per week, unless directed otherwise by the Commissioner, and which required the officers to certify an accounting of their activities and vehicle operation for the week. In addition, in 1985, in response to a Supreme Court decision which established the constitutionality of the extension of the federal wage and hour provisions to state employees, see Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), the Department issued a memorandum to the effect that "it continues to be Departmental policy that law enforcement officers may only work 40 hours per week." (Defendant's Exh. 18). All the enforcement personnel were informed of this restriction in writing and their supervisors were instructed to monitor their hours closely
In 1987, the State commissioned a study of government operations, the Alabama Management Improvement Program ("AMIP"), in an effort to identify ways to reduce costs and increase efficiency. Persons from within and without the Department were selected to make up the AMIP study team, including Chief Counsel James Goodwyn as well as Assistant Director Sam Spencer and Lieutenant William Fuller,
(Plaintiff's Exh. 173 at 80-81) (emphasis added). The cover letter accompanying the "Final Draft Report" discloses that it was sent to Governor Guy Hunt, and to the Department's Commissioner, Jim Martin. (See id. at inside front cover). In addition, according to AMIP policy, James Goodwyn, Sam Spencer, Assistant Commissioner Chester ("Corky") Pugh and Department Chief Dalton Halbrook were to receive copies of the "Final Draft Report."
On the basis of this evidence, the district court found that, as of August 1987, the Department was aware of allegations that officers continued to work unreported overtime hours.
The district court found it significant that, after the summer of 1987, all supervisors continued to repeatedly inform the officers that they could not work more than forty hours per week. Also, officers were instructed to call the central office to report calls they could not answer because of the work week limitation, or to refer these calls to other officers. They were also urged to complete their tasks by working their "best 40," that is, by managing their time better. (R1-22-22). Eleven officers claimed that they were able to perform their duties in forty hours.
III. ACTUAL OR CONSTRUCTIVE KNOWLEDGE
A. The governing law
The FLSA mandates that "no employer shall employ any of his employees ... for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours ... specified at a rate not less than one and one-half
29 C.F.R. § 785.13.
This court's predecessor recognized that "an employer's knowledge is measured in accordance with his `duty ... to inquire into the conditions prevailing in his business.'" Gulf King Shrimp Co. v. Wirtz, 407 F.2d 508, 512 (5th Cir.1969)
B. The standard of review
The Secretary urges us to review de novo the district court's finding that the Department had no actual or constructive knowledge of the uncompensated overtime. The Department contends that this is a finding of fact which we should uphold unless clearly erroneous.
The parties have not cited, and we have been unable to find, any decisions from this circuit which discuss the appropriate standard for reviewing a district court's determination as to whether an employer knew or should have known of overtime violations. The Department relies upon Davis v. Food Lion, 792 F.2d 1274 (4th Cir.1986), in which the United States Court of Appeals for the Fourth Circuit treated the issue as one of fact. See id. at 1277. This court has construed the question of actual or constructive knowledge as an issue of fact to be reviewed for clear error in other contexts. See, e.g., Lewis v. Federal Prison Indus., Inc., 786 F.2d 1537, 1543-45 (11th Cir.1986) (reversing as clearly erroneous a district court's finding with respect to whether management knew or should have known that remedial action taken to eliminate age discrimination was ineffective).
Under the Federal Rules of Civil Procedure, a district court's findings of fact "shall not be set aside unless clearly erroneous." Fed.R.Civ.P. 52(a). "A finding of fact is clearly erroneous `if the record lacks substantial evidence to support it,' so that our review of the entire record leaves us `with the definite and firm conviction that a mistake has been committed.'" Atlanta Athletic Club v. Commissioner, 980 F.2d 1409, 1411-12 (11th Cir.1993) (quoting Thelma C. Raley, Inc. v. Kleppe, 867 F.2d 1326, 1328 (11th Cir.1989), and United States v. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746, 766 (1948)). "Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous." Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518, 528 (1985). Notwithstanding Rule 52(a), an appellate court has
Although the issue of actual or constructive knowledge of overtime violations can be described as one of ultimate fact subject to the clearly erroneous standard of review, see Bose Corp., 466 U.S. at 501, 104 S.Ct. at 1959-60, 80 L.Ed.2d at 517, we find that, in arriving at its conclusion in this case, the district court misapplied the law.
The district court rested its finding that the Department could not be charged with knowledge of the overtime violations primarily upon the fact that supervisors repeatedly told the officers that overtime hours were prohibited. However, "[t]he mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so." 29 C.F.R. § 785.13. There is no indication in the record that the Department did anything at any time relevant to this litigation to discourage the overtime required by the vast majority of its officers to properly perform their duties other than to promulgate its policy against such work and to urge the officers to "work their best 40." For example, no officer was ever disciplined for violating the forty-hour rule.
If from no other source, the Department had actual knowledge through the 1987 AMIP study that unreported overtime during deer hunting season continued to be a substantial problem despite the Department's 1985 written policy prohibiting all such work. The study also revealed that supervisory personnel had failed to fulfill the 1985 directive to monitor the officers' hours closely to insure compliance. The district court found that the hunting activity that traditionally caused deer season to be such a busy period of time continued after 1985, and that there was no fundamental change at any pertinent point in the amount of work to be performed by the officers. Complaints about the forty-hour rule were common and the subject came up frequently during the district meetings.
In the face of the continued peak activity during deer hunting season and its specific knowledge that the 1985 policy against overtime was not being followed, the Department had a duty to do more than to simply continue to apprise the officers of the policy. The Department had an obligation to "exercise its control and see that the work [was] not performed if it [did] not want it to be performed." 29 C.F.R. § 785.13. The fact that some officers were able to comply with the forty-hour rule did not relieve the Department of its responsibility to ensure that the remaining officers did not violate the rule. We therefore conclude that the district court erred as a matter of law by finding that the promulgation of the forty-hour policy, coupled with the ability of some officers to comply, insulated the Department from liability.
In addition, the district court erred as a matter of law by failing to impute to the Department knowledge of the inconsistencies contained in the weekly and arrest reports, which revealed that certain officers were not reporting the total number of hours they actually worked during the 1987-88, 1988-89 and 1989-90 hunting seasons. The fact that the captains made only cursory examinations of these reports because of their own lack of time for review does not excuse them from being charged with constructive notice of the information contained in the documents. As noted earlier, an employer is not relieved of the duty to inquire into the conditions prevailing in his business "`because the extent of the business may preclude his personal supervision, and compel reliance on subordinates.'" Gulf King Shrimp. Co., 407 F.2d at 512 (quoting People ex rel. Price, 121 N.E. at 474). This is especially so where, as here, the Department specifically instructed its supervisors to closely monitor the officers'
This factual situation is comparable to that of another case, Brennan v. General Motors Acceptance Corp., 482 F.2d 825 (5th Cir. 1973), in which the former Fifth Circuit Court of Appeals held that the employer had constructive knowledge of unreported overtime. See id. at 828. As in this instance, the employees in Brennan were required by the nature of their jobs to work long and irregular hours in the field. Because they worked independently, their employer relied upon them to accurately report their hours. Upper management encouraged accurate overtime reporting, but the employees understated their hours due to pressure brought to bear by their immediate supervisors. The court held that an employer exercising reasonable diligence would have gained knowledge of this fact. Id. at 827.
We hold that, under the circumstances of this case, the Department was required to do more than to simply periodically issue admonishments to avoid liability under the FLSA. As in Brennan, the Department could have acquired actual knowledge of the continuing overtime problem through the exercise of reasonable diligence. Accordingly, the case must be remanded for further proceedings on the issue of damages.
IV. THE STATUTE OF LIMITATIONS
The district court went further and found that any infractions of the FLSA committed by the Department were not willful and thereby triggered the imposition of a two-year statute of limitations. See 29 U.S.C. § 255(a). In McLaughlin v. Richland Shoe Co., 486 U.S. 128, 108 S.Ct. 1677, 100 L.Ed.2d 115 (1988), the Supreme Court defined willful violations as those where "the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute." Id. at 133, 108 S.Ct. at 1681, 100 L.Ed.2d at 123. We review the district court's finding on this issue under the clearly erroneous standard. See Formby v. Farmers & Merchants Bank, 904 F.2d 627, 632 (11th Cir.1990).
The district court found that the Department's approach to unauthorized overtime changed from a pattern of acquiescence evident in 1985 to a more vigilant attitude toward its proscription in 1987. Although the Department should have done more to ameliorate the problem, it did at least attempt to address it, albeit ineffectively. We cannot say on the basis of the record before us that it showed reckless disregard for the matter of whether its conduct was prohibited. Its failure to rectify this troublesome situation can better be described as resulting from negligence rather than from willfulness. See McLaughlin, 486 U.S. at 133, 108 S.Ct. at 1681, 100 L.Ed.2d at 123 (the term "willful" is generally understood to refer to conduct that is not merely negligent). We, therefore, affirm as not clearly erroneous the district court's determination that the two-year statute of limitations governs these claims.
AFFIRMED in part and REVERSED and REMANDED in part.