Establish Clear Employee Hour Tracking Systems to Avoid Unpaid Overtime Claims.

Are your employees keeping “secret” time cards? Don’t be surprised!

I am amazed at the number of employee wage disputes I encounter for clients whose aggrieved employees claim unpaid overtime or claim compensation for legally required breaks they were entitled to take but either claim they were not permitted to take – or simply failed to take. And they show up with “secret” never disclosed before “records” sometimes going back several years. Surprised employers are dazed and confused!  Since when did their employees start submitting time cards for wages, but hide and hold back the not taken breaks and the unreported overtime pay?

When these claims are filed with the employee centric and unabashedly employee favorable California Labor Commissioner, employers can’t do much except get out their checkbooks.

Employer Protect Thyself.

I have long counseled clients to establish a clear and mandatory full time and breaks reporting system that demands employee disclosure of all these details in each pay period.  In addition to claiming hours, employees are required to certify that no other time has been worked and no other claims are existing but not disclosed.  The payroll reporting document becomes, essentially, a mini disclosure and release agreement, insuring that all the employee wage, hour and break claims are “on the table” at that time, or forever waived.

There is no judicial precedent to support this approach.  A recent decision from the Tenth Circuit Court of Appeals holds that employers can avoid liability under the Fair Labor Standards Act for unreported overtime pay, even if that time is undeniably worked by an employee, when the employee fails to use the employer’s time reporting system to record his or her exact working time.

In Brown v. ScriptPro LLC, employee Brown claimed he worked from home while he was out of the office.  He claimed that he was owed overtime pay for the 80 hours he had worked from home.  The employer did not deny that he had, in fact, worked overtime.  But the employee’s claim failed because he did not prove the amount of overtime he worked “by justifiable or reasonable inference.”  He did not enter his hours worked in ScriptPro’s timekeeping system, which was accessible to him from home.  He did not keep any other record of the hours he claimed he worked.  His employers company policy required him to record his working time accurately, and he had failed to do so.  The Court  held that “Under these circumstances, where the employee fails to notify the employer through the established overtime record-keeping system, the failure to pay overtime is not a FLSA violation.”

Mr. Brown chose not to enter any of the hours he allegedly worked from home in ScriptPro’s timekeeping system.  He did not keep any other record of any sort to document the hours worked. Id. Mr. Brown argues that ScriptPro is responsible for keeping accurate records and the employee cannot bear the burden of proving the precise amount of overtime worked.  But courts only relax the plaintiff’s burden to show the amount of overtime worked where the employer fails to keep accurate records.  It is undisputed that ScriptPro keeps accurate records, and employees can even access the timekeeping system from home. Mr. Brown easily could have entered his hours; in fact, he was required to do so. There was no failure by ScriptPro to keep accurate records, but there was a failure by Mr. Brown to comply with ScriptPro’s timekeeping system. Under these circumstances, where the employee fails to notify the employer through the established overtime record-keeping system, the failure to pay overtime is not a FLSA violation. (Citations omitted)

Employers are well advised to implement clear, reasonable and mandatory full hours tracking and recording obligations and an in house system to track all employee hours.