Thursday, November 8, 2012

System for employees to report unpaid time insulates company from wage and hour claim, says 6th Circuit

In White v. Baptist Memorial Hosp. (6th Cir. 11/6/12) [pdf], the 6th Circuit answers one of the more difficult questions that faces employers under our wage and hour laws—what is an employer’s responsibility to pay an employee for off-the-clock work?

The employer in White maintained a policy under which all employees received a daily, automatic unpaid meal break. The policy also provided, however, that if an employee worked through a meal break, or had a meal break interrupted for a work related reason, the employee would be compensated for the time worked. The policy instructed employees to record all time spent working during meal breaks in an “exception log,” from which the employer calculated any off-the-clock pay owed.

The plaintiff, Margaret White, testified that she usually was paid when she reported a missed meal break in the exception log. She also testified that there were occasions when she missed meal breaks and was not compensated. When there were payroll errors, White stated that she reported the mistake to a nurse manager, and the problem were “handled immediately.” White testified that while she told supervisors and the HR department that she had missed meal breaks, she never told them that she had not been paid for them.

Eventually, White stopped reporting her missed meal breaks in the exception log, and stopped reporting payroll errors to a nurse manager. Instead, she brought suit under the Fair Labor Standards Act for failing to compensate her for working during meal breaks.

The 6th Circuit concluded that White’s case was properly dismissed. It focused its analysis on this issue—whether the employer knew, or had reason to know, it was not compensating White for working during her meal breaks. Because White had failed to follow the hospital’s procedures for reporting unpaid time, the employer was not at fault:

Under the FLSA, 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. When the employee fails to follow reasonable time reporting procedures she prevents the employer from knowing its obligation to compensate the employee and thwarts the employer’s ability to comply with the FLSA….

Baptist established a system to compensate its workers for time worked during meal breaks. When White utilized the system she was compensated and when she failed to use the system she was not compensated. Without evidence that Baptist prevented White from utilizing the system to report either entirely or partially missed meal breaks, White cannot recover damages from Baptist under the FLSA.

What is the lesson for employers to take away from White? Have a reasonable process for employees to report uncompensated work time. Under the FLSA, it is the employee’s burden to show that he or she was working during non-working time. A policy that underscores that burden by requiring employees to document times during which they are working “off-the-clock” can only help an employer defend against an employee’s claim for compensation for unreported, off-the-clock time.