Employer Without Notice of Off-the-Clock Work Not Liable for Unpaid Wages

 This week a California court issued a favorable decision for the employer in an off-the-clock case, holding that the employer was not liable to the plaintiff for work the plaintiff performed off-the-clock because there was no evidence that the employer knew about the off-the-clock work. While this is not a novel holding (it is well-settled that an employer is only liable for wages for off-the-clock work if the employer had actual or constructive knowledge about such work), the case is useful in illustrating the types of evidence that courts consider in analyzing whether the employer had “knowledge” of off-the-clock work being performed.

In Jong v. Kaiser Foundation Plan, the plaintiffs were three outpatient pharmacy managers for Kaiser. Their position previously was classified as exempt but Kaiser reclassified the position to non-exempt in connection with the settlement of a prior class action challenging the exempt classification of this position. Following the reclassification of the position to non-exempt, the plaintiffs filed a putative class action against Kaiser, alleging that Kaiser had a policy and practice of requiring its outpatient pharmacy managers to perform work off-the-clock and without pay. Kaiser filed a motion for summary judgment as to each of the three named plaintiffs’ off-the-clock claims. The trial court granted Kaiser’s motion as to Plaintiff Jong (holding that Kaiser was not liable to Jong and ending Jong’s claim against Kaiser), but denied the motion as to the other two named plaintiffs, allowing their claims to proceed. Jong appealed the adverse ruling against him.

The Court of Appeal upheld the trial court’s order summarily adjudicating Jong’s off-the-clock claim in Kaiser’s favor. The court explained that in order for an employer to be liable for unpaid wages for work performed off-the-clock, there must be evidence that the employer had actual or constructive knowledge that the employee was performing work off-the-clock. The court held that Jong had failed to present evidence from which it could be concluded that Kaiser had knowledge that he performed any work off-the-clock. The court’s holding was based on several admissions that Jong made in the case, including that (1) he knew Kaiser had a policy prohibiting off-the-clock work; (2) no manager or supervisor ever told him that he should perform work off-the-clock; (3) he was specifically told that he was eligible to work and be paid for overtime hours; (4) there was never an occasion when he requested approval to work overtime that was denied; (5) that he was paid for all work hours he recorded, including overtime hours, even when he did not seek pre-approval for the overtime work; and (6) he signed an attestation form agreeing not to perform work off-the-clock in accordance with Kaiser policy.

Notwithstanding these fatal admissions by Jong, Jong argued that Kaiser nevertheless still had constructive knowledge that he was performing work off-the-clock based on the fact that store alarm records revealed that Jong disarmed the alarm prior to the time he recorded beginning work and that Kaiser could have compared the alarm records to his time keeping records to discern that he was performing work off-the-clock prior to the start of his shifts. The court rejected this argument, suggesting that the standard for constructive knowledge is not whether the employer “could have known” that off-the-clock work was being performed, but rather whether the employer “should” have known about it. Moreover, the court held that the records did not establish that Jong was actually performing any work during any gap between disarming the alarm and signing in for the start of his shift.

Jong also argued that Kaiser was on notice that outpatient pharmacy managers must be performing work off-the-clock based on depositions in the misclassification class action revealing that employees in this position testified to working an average of 48 hours per week. The court rejected Jong’s argument, reasoning that this evidence related to work habits prior to the reclassification of the position from exempt to non-exempt and, in any event, the evidence did not establish that Kaiser had knowledge that Jong (as opposed to OPMs generally) was performing work off-the-clock. For these reasons, the court entered judgment in favor of Kaiser on Jong’s claims.

While Kaiser was successful in defending Jong’s claims, it did not have the same success in getting the other two named plaintiffs’ claims thrown out. The trial court denied Kaiser summary judgment of their claims, based on testimony by those plaintiffs that they had conversations with their supervisors about performing work off-the-clock. Based on that testimony, the trial court concluded that there was a triable issue of fact regarding whether Kaiser had sufficient notice of those plaintiffs’ off-the-clock work to be liable for unpaid wages and that this issue would have to be tried.

The Jong v. Kaiser case is a good reminder of the importance of well-drafted and communicated policies prohibiting off-the-clock work and how documentation of those policies is effective evidence in defeating off-the-clock claims. The opinion also has useful language for employers to use in emphasizing the individualized nature of the liability inquiry on an off-the-clock claim, for purposes of opposing class certification when such claims are brought as putative class actions. The full opinion is here [an enhanced version of this opinion is available to lexis.com subscribers].

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