The Fifth Circuit recently sided with an employer in an off-the-clock overtime case where the employee failed to comply with her employer’s overtime approval and reporting policies. For employers, this decision highlights the importance of implementing overtime authorization and reporting policies to defeat these claims.
The case, Fairchild v. All American Check Cashing, Inc., involved an employee who worked for a loan and check cashing company. At all times during her employment, All American had a policy that prohibited hourly employees from working overtime without prior approval from a manager or supervisor and required employees to accurately report their hours in its designated timekeeping system. She later claimed All-American failed to pay her overtime for hours that she did not report through its timekeeping system.
Did All-American Have Knowledge of the OT Worked?
The FLSA issue in this case boiled down to whether All American had knowledge, actual or constructive, of the employee’s alleged unrecorded overtime hours. Under Fifth Circuit precedent, employers who know that an employee is working overtime must pay the employee overtime even if the employee does not ask for overtime compensation. An employer is not liable, however, if the employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime worked.
The employee argued that although she did not seek prior supervisory approval for working overtime or report her time through All American’s timekeeping reporting system, All American had implicit knowledge that she worked overtime hours through her “computer access” records, which would show when she “clocked out.” The court firmly rejected this argument, saying that although All American could have potentially discovered that she was working overtime through her computer access records, the standard was whether All-American should have known, and on this basis, the court found that “mere access” to this information was insufficient to impute knowledge of OT worked to All-American. The court was also persuaded by the absence of any evidence showing that All-American required her to work unapproved overtime and otherwise falsify her time records.
Fairchild demonstrates the critical importance of having a written policy that clearly outlines when employees are permitted to work overtime and the steps that they must take to obtain approval to work overtime. Fairchild also stressed the importance of having a policy by which employees should report overtime hours worked. Taking these simple steps can make the difference when faced with an off-the-clock claim.
Look out on Monday for a follow-up post highlighting the additional steps employers can take to reduce their exposure to off-the-clock claims.