FLSA: Employer Liability for Uncompensated Work Time

Wednesday, October 16, 2013

An employee who works through mandated lunch or meal breaks without recording the hours, and who is thus not compensated for all hours worked, can present a thorny issue for the employer, as the employer is exposed to a Fair Labor Standards Act claim for failing to pay for the work performed.  Resolution of the employee’s claim for compensation for missed lunch or meal breaks will turn on whether the employer knew or should have known of the uncompensated work; if the employer allowed it to happen, the employee must be compensated. FLSA regulations are clear about this:  (1) “work not requested but suffered or permitted is work time.”  (29 C.F.R. § 785.11); and (2) if the “employer knows or has reason to believe that [a worker] is continuing to work [then] the time is working time.”(29 CFR § 785.11).

It is easy to say that if the employer does not know or have reason to know that the employee is working uncompensated hours the employer is not liable under the FLSA, but it can be difficult to prove this negative.  A written policy requiring employees to report all work time and to report missed breaks, and making payment to those employees who make such reports, is one way an employer can ensure that it pays employees for all time worked and is not subjected to liability for uncompensated work.  This was confirmed earlier this month when the United States Supreme Court declined to hear an appeal from a decision by the Sixth Circuit Court of Appeals ruling for the employer.

In White v. Baptist Memorial Health Care Corp., 699 F.3d 869 (6th Cir. 2012), the Court granted summary judgment for the employer, basing its decision on the employer’s written policies and the employee’s failure to comply with the policies.   The written policy in the employer’s handbook provided that employees were entitled to unpaid meal breaks that were automatically deducted from the paycheck and also provided that if an employee missed a meal break or the meal break was interrupted for a work-related reason, the employee would be compensated for the time worked.  The employees were instructed to record on a log all of their time spent working.  Ms. White signed a document indicating she understood the policy.  For a time she completed the log (and was paid for the missed breaks) but she then stopped doing so and later claimed she should be paid for the time worked during the meal breaks that were deducted from her paychecks.
The bottom line from the White case is if an employer establishes a reasonable process for an employee to report uncompensated work time and the employee fails to follow the process, it is unlikely the employer will be liable.  A different result could occur if there was evidence the employer discouraged employees from following the process, but short of that it is unlikely a court would hold an employer liable when it had no way of knowing the employee was working uncompensated hours.