That was the question that the Seventh Circuit Court of
Appeals faced in an opinion released yesterday.
If you don't know, then you don't pay.
Labor Standards Act (FLSA), among other things, establishes minimum wage
and overtime pay standards affecting employees in the private sector and in
Federal, State, and local governments. With respect to overtime pay, employer
must pay time-and-a-half to covered non-exempt employees who work more than 40
hours in a given week.
But what happens if an employee works OT and you don't
know about it?
In Kellar v. Summit Seating, Inc. [an enhanced version of this opinion is available to lexis.com subscribers
/ unenhanced version available from lexisONE Free Case Law], a copy of which
you can find here,
the court recognized that to state a claim under the FLSA, an employee must
show that her employer knew about the OT:
The FLSA imposes an obligation on the
employer to exercise its control and see that work is not performed if it does
not want it to be performed. The employer cannot sit back and accept the
benefits without compensating for them. The employer's duty arises even where
the employer has not requested the overtime be performed or does not desire the
employee to work, or where the employee fails to report his overtime hours. The
mere promulgation of a rule against overtime work is not enough. Nor does the
fact that the employee performed the work voluntarily necessarily take her
claim outside of the FLSA. However, the FLSA stops short of requiring the
employer to pay for work it did not know about, and had no reason to know about.
(internal citations and quotations omitted).
In Kellar, the plaintiff went so far as to clock
into work early. However, the court held that punching in before a scheduled
shift is not enough, by itself, to put an employer on notice that the employee
is working OT. That is, employees who clock in early may not be performing
work. And employees don't get paid for standing around and doing nothing.
(Although, waiting time may be compensable).
Here's a tip to guard against overtime abuse.
Have a written policy mandating that non-exempt employees
must first obtain supervisor approval to work OT. If employees violate that
policy, you still may have to pay that OT. However, you can also counsel and,
as necessary, discipline those who violate the policy. And by no means should
employers modify time records. Unless, of course, you like lawsuits.
This article was originally published on Eric B. Meyer's blog, The Employer
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