Wednesday, July 14, 2010

Compliance and training key to victory in overtime lawsuit

A New York federal court recently dismissed a wage and hour collective action that sought unpaid overtime for “off-the-clock” work. The plaintiffs in Keubel v. Black & Decker claimed their employer maintained a policy of refusing to pay employees for any hours worked over 40 in a week. The court concluded that Black & Decker did not have to compensate employees for time worked that it did not know about or could not reasonably have known about. In support of its conclusion, the court relied upon Black & Decker’s wage and hour compliance and training, including written wage and hour and work time reporting policies, an anti-retaliation policy, an anonymous hotline for reporting violations, and regular training of all employees at all levels on wage and hour compliance:

It is undisputed that there was a company wide written policy concerning accurately recording all hours worked on ones time sheets, including overtime. Indeed, Black & Decker maintains a Code of Ethics that requires all employees to maintain the integrity of company records, explains the company’s commitment to obeying all laws expressly, including all wage and hour laws, and requiring employees to report what they believe to be violations of the Code of Ethics. As part of the effort to reinforce the Code of Ethics with all employees, Black & Decker mailed a copy of a brochure entitled “Doing What’s Right” to all employees on April 10, 2006, which summarized the critical aspects of the Code of Ethics.

Black & Decker sent out a series of e-mails to all current employees, which focused on topics addressing the Code of Ethics. In fact, an e-mail sent to all employees in January 2007 regarding accurate business records provided that all employees were required to “ensure that business records (for example time cards, travel and expense reports, invoices, and purchase orders) are honest, complete and not misleading.” It directed employees to “watch out for falsifying records or documents” and to beware of “[a]ssisting anyone with or going along with the creation of inaccurate or misleading records.” Employees were told, “If you are asked or aware of efforts to alter, destroy, conceal, falsify or not create business records, report this to your supervisor immediately[.]” In addition, employees were given an e-mail address and phone number by which they could make anonymous reports of violations. Significantly, no complaint was ever made by plaintiff through this process, nor was any anonymous complaint made regarding plaintiff’s supervisors. Based on these undisputed facts, plaintiff cannot meet his burden of proving that Black & Decker had actual or constructive knowledge of the hours he worked off-the-clock.

I’ve said it before, and in light of this case I’ll say it again—policies, training, and other compliance initiatives are crucial in preventing and ultimately winning litigation. KJK offers a proprietary (and complementary) 200-point HR and employment practices audit, which includes wage and hour compliance. This examination of your practices and procedures is the first step in making your organization litigation resistant.

[Hat tip: ELT, Inc. Blog, c/o Fair Labor Standards Act Law]

Presented by Kohrman Jackson & Krantz, with offices in Cleveland and Columbus. For more information, contact Jon Hyman, a partner in our Labor & Employment group, at (216) 736-7226 or