Sound Overtime Policies Enable Employer to Overcome Claim for Unrecorded Time

Under the FLSA, an employee must be compensated for all time he or she is “suffered or permitted to work” on behalf of his or her employer.  This seemingly simple concept has spawned a good deal of litigation.  Most often, these cases involve claims seeking compensation for unauthorized or unapproved overtime hours.  A recent decision issued by a federal district court in New York provides something of a roadmap for employers looking to fend off such claims.

Citing to U.S. Supreme Court and Second Circuit precedent, the district court in Joza v. WW JFK LLC, No. 07-CV-4153, 2010 U.S. Dist. LEXIS 94419 (E.D.N.Y. Sept. 10, 2010) set out the operative analytical paradigm applicable to claims for unpaid overtime: “Setting aside the issue of employer notification, a general assertion that a worker performed uncompensated overtime work will still not do.  There is a need for particularization of the claim.  Even ‘when the employer’s records are inaccurate or inadequate and the employee cannot offer convincing substitutes,’ a worker must proffer nonetheless ‘sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.’  Upon such a showing, the burden of production shifts.  The employer would then be obligated to ‘come forward with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.’”  Id. at *20-21.  Notably, though, “where … ‘it is undisputed that the employer’s record-keeping complied with the requirements of the FLSA …, and that the plaintiff’s time records were maintained and paid exactly as plaintiff fashioned them, meaning any inaccuracies in the employer’s records are solely due to the plaintiff’s deliberate failure to accurately report the time she worked,’ the … burden of production shifting is not applied because ‘the time record ‘deficiencies’ alleged by the employee are admittedly and voluntarily self-created.’”  Id. at *21.

With this legal landscape as a backdrop, the Joza court considered, and rejected, a hotel reservation agent’s claim that she was entitled to overtime pay for hours she allegedly worked but purposefully did not record on her timesheets.  The employer was able to prevail in large measure because it adopted, and enforced, rigid policies governing the recording of work hours and consistently paid employees for all hours entered on their timesheets, including overtime hours.  Thus, the court observed “that it was hotel policy …, one religiously followed by Ramada, that an employee who had worked overtime hours also had to complete a written overtime form  setting forth the number of hours worked on an overtime basis, the date upon which these hours had been or were to be worked, and the reason for the overtime worked.”  Id. at *4.  This sound policy was buttressed by the plaintiff’s admission “that the overtime hours claimed on every overtime slip she ever submitted to hotel management was paid in full regardless of whether overtime authorization had been approved before or after she had actually worked the overtime hours.  And, far more critically, Joza conceded that no Ramada manager… ever told her not to submit overtime forms for overtime hours worked, or punished or disciplined, or threatened to punish or discipline her, formally or informally, for working or seeking permission to work overtime hours.”  Id. at *5.

Given these facts, the plaintiff was left to base her claim for overtime compensation on a theory of constructive knowledge.  Under this theory, an employer is accountable for overtime hours it reasonably should have known the employee had worked, even if the hours were not recorded on a timesheet or otherwise.  In Joza, the plaintiff “[c]onced[ed] that she said nothing and did nothing contemporaneously with her performance of work on an overtime basis to put her supervisors on notice of such work (and, in fact, actually misled them by denying that she worked overtime),” but “contend[ed] nonetheless that, since some of the individual defendant supervisors were sometimes in the vicinity of her workspace while she was eating at her desk, or when she was present at her desk after her scheduled shift had ended, that they must have realized that she was not only there but working on hotel business and doing so on overtime.”  Id. at *11-12.  Key to the court’s rejection of this assertion was its finding that it was “corporate policy for managers to review each employee’s weekly time clock report and, should the time clock reports establish that an employee who was on the hotel premises in excess of that employee’s scheduled hours, the manager was then obliged to make specific inquiry of the employee to ascertain whether the employee had worked overtime without submitting the required overtime form.”  Id. at *14.

Because Ramada was able to prove that its managers “followed company policy and protocol designed not to frustrate legitimate overtime claims, but to ensure that, by the reconcilement of payroll and time clock records, each employee was compensated at the appropriate overtime rate for any work actually performed on an overtime basis,” id. at *16, the court ultimately determined that “defendants had no knowledge (actual or constructive) of Joza’s alleged extra overtime work” and hence denied her claim.  Employers would be wise to follow Ramada’s lead and:

  • adopt, maintain and enforce written policies requiring supervisory approval of overtime hours worked or to be worked by non-exempt employees;
  • counsel supervisory personnel not to in any way discourage non-exempt employees from recording hours worked on their time sheets;
  • craft a simple form to be completed by non-exempt employees, and signed off on by a supervisor, that specifies the date of, number of hours spent on, and the reason for, any overtime work;
  • compensate non-exempt employees for all overtime hours reflected on the overtime form;
  • direct supervisory personnel to question non-exempt employees found at their work station before or after the scheduled shift, or during meal and rest breaks, as to whether they are performing work for the benefit of the employer; and
  • reconcile discrepancies between payroll and time clock records to ensure that non-exempt employees are compensated for all overtime hours actually worked.


By Lawrence Peikes, Wiggin and Dana LLP


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