One of the most popular wage claims we see in court these days is a claim for back pay - often at overtime rates -- for "off-the-clock" work. Often the defendant did not authorize the work or did not ask for the work: in some cases, the employer did not even know the work was being performed. Nevertheless, off-the-clock work claims are common and often result in plaintiff verdicts or large settlements.
Part of the problem relates to a failure by employers to understand the legal definitions of work and how these definitions operate in practice. The Fair labor Standards Act (FLSA) has been interpreted consistently to require payment of wages even if the employer neither knew about nor authorized the work. Employers often fail to develop employment policies that can minimize such claims and preserve legal defenses when such claims arise.
Perhaps the beginning point in understanding these issues is to look at the definition of work. The FLSA states that an employer employs an employee when that employee is "suffered or permitted to work." The leading case held that an employee is "suffered or permitted to work" if: (1) he or she worked overtime without compensation; and (2) the "[employer] knew or should have known of the overtime work." Allen v. Board of Public Education for Bibb County, 495 F.3d 1306, 1314-15 (11th Cir. 2007).
The court went on to observe that "It is not relevant that the employer did not ask the employee to do the work. The reason that the employee performed the work also is not relevant. If the employer knows or has reason to believe that the employee has continued to work, the additional hours must be counted."
It has always intrigued this writer that the FLSA uses such antiquated language in its definition. Regardless of the awkward terminology, the effect is that the employer must pay for all hours actually worked even if the employer lacks actual knowledge that the work is being performed. Court rulings have held that "constructive knowledge" of an employee's work time is sufficient to make the employer responsible for those hours. The phrase "should have known" refers to the factual circumstances indicating that hours worked were open enough (i.e., not concealed) that the employer had an obligation to have known of the work.
A further danger is that employers sometimes keep insufficient or poor time records, and employees are becoming increasingly sophisticated about proving they actually worked additional time. If an employer does not keep accurate time records, the employee's rough notes or even mere estimates of the time worked often are sufficient to get a case to a jury or otherwise result in a victory for a plaintiff. It is the employer’s legal duty to keep track of all hours worked.
The employer doesn’t have to track hours for exempt employees who are paid on a salary basis, but if a court later determines that the employee did not qualify as exempt then reconstructing hours worked can be a painful and expensive proposition. We will explore misclassification another time.
So, what can an employer do to avoid these type situations and claims? The starting point, as in so many other employment issues, is to have appropriate written employment policies. The policies should explicitly prohibit off-the-clock work and should make it crystal-clear that employees must not perform work without obtaining advance permission to do so. The policies also must require employees to report all hours worked to the employer. Some employers take the extra step of requiring employees to "certify" with a signature the hours actually worked every pay period, including a statement that they have reported all hours worked.
Indeed, employers can and should counsel employees who fail to report off-the-clock work. A history of counseling employees in this manner helps to show the employer did not have "constructive knowledge" of such extra work and that employer is serious about paying employees for time actually worked.
Some employers make a common mistake when they know about extra work performed, but not reported, thinking that they do not have to pay the employee for such time because the extra work was not "authorized." This usually doesn't succeed. An employer can discipline a worker for working unauthorized extra time, but they must be paid for those hours. If the employee has violated the employer's rules for reporting time worked, the employee should be counseled and disciplined but nevertheless must be paid. The employer should investigate all claims of time worked but not paid. If needed, give training and counseling to the employee who fails to report all hours worked, but remember always that they must be paid.
Meal periods are especially susceptible to claims of working time not being compensated. Employees should be instructed to report all time worked, especially when they work through a meal break. This is particularly important when the employer has an automatic deduction for a meal break that must be overridden in the payroll system when the employee works through lunch.
Sometimes inexperienced supervisors allow work to go unreported, thinking they are helping the company. They're not: they actually may be getting their company into trouble. Supervisors should be trained that this is not permissible, and that all work performed must be reported and paid. Any suspicion of additional hours worked should be investigated and addressed promptly. A quick correction can protect against greater liability.
This article is part of our May 2023 Newsletter.
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