Type: Law Bulletins
Date: 11/14/2012

Recent Decision Helps Employers Manage Risks From Off-the-Clock Work

The President’s re-election ensures that his administration’s intensified enforcement of the Fair Labor Standards Act (FLSA) will continue. Fortunately, a new decision by the United States Court of Appeals for the Sixth Circuit creates a rare bright spot for employers seeking to manage their FLSA liability risks.

The employer in White v. Baptist Memorial Health Care Corp. made automatic deductions for meal breaks of its hourly employees. The hospital’s policy also made clear that, as required by the FLSA, it would compensate employees if they had to work during a meal break. Nurse Margaret White signed an acknowledgement of the policy, under which she was required to record her time on an "exception log" if a meal break was interrupted by work. The hospital also had a procedure for employees to report payroll errors such as failure to pay for recorded time.

On several occasions, Nurse White was not paid for time that she had submitted on the exception log. When she did report these problems, she testified that the hospital corrected the errors immediately. But she did not always report payroll problems, despite knowing the procedure for doing so. Eventually, she even stopped using the exception logs.

When Nurse White sued for unpaid time under the FLSA, the hospital raised her failure to utilize the procedures for recording interrupted meal breaks and for correcting payroll errors. The Sixth Circuit agreed and stated that "if an employer establishes a reasonable process for an employee to report uncompensated work time the employer is not liable for non-payment if the employee fails to follow the established process." The court also noted a lack of any evidence to suggest that the hospital discouraged employees from using the reporting procedures.

Just as all employers should have a written policy requiring employees to report harassment and discrimination, employers should explicitly require hourly employees to record all time worked and to report any payroll errors immediately. Likewise, effective procedures should accompany those policies. Without such measures, employers have limited ability to defend against a current or former employee who claims to have done off-the-clock work.

For more information, please contact a member of Taft’s Labor and Employment practice group.

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