The Fifth Circuit recently provided new ammunition to employers in defending against overtime wage claims premised upon so-called “off the clock” violations that have become all too common in wage and hour cases. As a defense to such claims, employers may now argue that an employee violated provisions in its employment policies mandating that employees seek pre-approval for overtime and report all overtime hours worked to the employer.
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Under the Fair Labor Standards Act (FLSA), an employer must pay overtime compensation to covered employees at not less than one and one-half times the regular rate of pay for all hours worked over forty hours in a workweek. If an employer knows that its employees are performing overtime work, payment must be made even if the employees do not put in a claim for overtime compensation.
In “off the clock” claims, employees contend that they are owed back wages for performing work either before clocking in or after clocking out of work. They contend that regardless of what their time records actually show, they were required to perform job functions before and after work which were never reflected on their time records or in the employer’s timekeeping system. These claims have become a favorite for plaintiffs’ attorneys specializing in wage and hour class action lawsuits. These types of claims are particularly troublesome for employers with multiple locations, as they are difficult to monitor as there is nothing in the employee’s time records or the timekeeping system to otherwise alert the employer of any alleged violation of law. For the same reason, they are particularly prone to abuse.
In Fairfield v. All Am. Check Cashing, 2016 U.S. App. LEXIS 1298 (5th Cir. Jan 27, 2016), the Fifth Circuit affirmed a district court’s finding that an employer did not violate the FLSA when the employee failed to record her overtime hours worked in violation of the company’s written timekeeping policy. The employee was an hourly paid employee during the time she held a position as a manager trainee. The company’s overtime policy prohibited hourly paid employees from working overtime without supervisor approval. The policy further required that the employees accurately record all hours worked in the company’s designated timekeeping system. While it was undisputed that the company had properly paid the employee for all authorized overtime hours and all hours she had recorded in the timekeeping system, the employee claimed that she worked additional overtime that she had failed to record in the specified timekeeping system and for which she was not paid.
In holding that the employer had not violated the FLSA’s overtime requirements, the Fifth Circuit noted that the employee had ignored her employer’s stated policy on seeking preapproval for working overtime and had further violated the policy by failing to record her overtime hours worked: “she neither sought authorization to work such overtime nor reported the alleged hours through [the employer]’s timekeeping system.”
Furthermore, the Fifth Circuit rejected the employee’s argument that the employer was on constructive notice of the overtime hours worked based on other available records. The employee argued that the employer could have looked at her computer usage reports, which would have alerted the employer that she had been performing job functions even after clocking out of the timekeeping system. Although the Fifth Circuit acknowledged that the employer could have discovered the overtime hours from the computer usage records, it framed the issue as whether the employer should have known. It rejected the notion that mere access to the computer usage reports information was sufficient to impute any sort of constructive knowledge to the employer.
The Fifth Circuit distinguished the employee’s overtime claims in Fairfield from situations involving intentional acts by the employer to avoid paying overtime. The employer had not encouraged or forced the employee to submit incorrect or falsified time records.
Takeaway for Employers:
Fairfield is great news for employers battling “off the clock” claims. Employers’ standard written policies or employee handbooks likely already contain language mandating that employees obtain preapproval to work overtime and that employees are responsible for accurately recording and reporting all hours worked. These standard provisions will now serve as a potential bar to these types of “off the clock” wage and hour claims.
Even so, employers are encouraged to review their policies to make sure that they clearly state employees must seek preapproval for all overtime hours worked, that off the clock work is prohibited, and that the failure to accurately record hours worked is grounds for discipline. For employers that do not currently have these standard provisions in their written policies, they need to be added and the employees should be made to acknowledge receipt of the changes.
Employers are also encouraged to regularly train their supervisors to ensure that they are knowledgeable about the policies and they are monitoring that hourly paid employees are not performing any job functions either before or after clocking in or out of work. Employers are also encouraged to allow time within the employee’s scheduled work hours to perform all activities that are essential to the performance of their job functions. Finally, it would also be advisable to consider having employees review and sign off on their time records each week or pay period, thereby acknowledging the accuracy of their hours worked.