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Will Your Policies and Time Recording Systems Save You in a Wage and Hour Lawsuit?

When an employee sues her employer claiming she has worked off-the-clock and the employer knew or should have known about it, an employer’s fate is in the hands of proof.  This can occur despite the employer’s best intentions and clear written policies.  Now, however, the U.S. Court of Appeals for the Sixth Circuit has enabled some employers to breathe a sigh of relief.  The Sixth Circuit ruled that an employee should follow an employer’s policies before she sets out to sue her employer for violating federal Fair Labor Standards Act, which governs minimum wage and overtime requirements.  Otherwise, an employee may risk her claims being dismissed.  Recently, the Supreme Court denied review of this case, which means the Sixth Circuit’s decision stands.

In White v. Baptist Memorial Health Care Corporation, 699 F.3d 869, 876 (6th Cir. 2012), the Sixth Circuit noted 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 Sixth Circuit dismissed the plaintiff’s claims for unpaid worked lunch breaks, where she had failed to follow the employer’s policies to notify it that she had worked through the break (whether the entire break or part of the break) to ensure she would be paid.  In its decision, the Sixth Circuit noted this employer had established a clear process to ensure employees are compensated and the employee failed to follow it.  Specifically, this employer: (1) had a handbook setting forth the policy that if a meal break was missed or interrupted, an employee would be paid; (2) had asked employees to confirm in writing that they  had reviewed the company’s policies and procedures with a supervisor, including the meal break policy; (3) had asked employees to record when they worked through breaks or were interrupted during breaks in an “exception log,” so they could be paid; and (4) had identified and apprised employees of an avenue to complain about payroll mistakes.

While there is no guarantee that other circuits will adopt this view, it certainly would be sound practice for employers to review their current policies and make sure they include reasonable provisions concerning uncompensated work time.  In doing so, employers should include in their protocols explicit provisions, like those identified by the Sixth Circuit, above.  In general, anything an employer can do to show that an employee would get paid for worked time, had a means of reporting overtime or worked break time, and was aware of a payroll complaint procedure, would be helpful.  While this case did not mention retaliation, a good policy would instruct employees that they will not face retaliation for reporting such issues.

Similarly, modifying certain payroll practices may also prove useful.  For instance, having employees sign an acknowledgement on their time record submissions that all the hours worked for that time period have been recorded may work in an employer’s favor during litigation.  Even if courts outside the Sixth Circuit do not adopt the reasoning in this case, at a minimum, an employer may have a jury or a judge wondering why the employee failed to follow clear procedures and why the plaintiff lied on her time submissions.  This may lead the judge or jury to believe the employer’s account of time worked over the employee’s.

Brody and Associates regularly advises management on complying with state and federal employment laws including wage-and-hour laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.