Tag Archives: Overtime Pay

Court Lays Out Guidance for Ensuring Hourly Workers Are Paid for Off-Duty Work

Contributed by Steven Jados, October 11, 2017

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Addressing an employment issue of interest in an increasingly digital world, the Seventh Circuit Court of Appeals (which has jurisdiction over lower federal courts in Illinois, Indiana, and Wisconsin­­) recently upheld a prior ruling that the City of Chicago was not liable for paying wages for certain employees’ off-duty work time.

In the case of Allen v. City of Chicago, employees who alleged they were not compensated for off-duty work performed on their mobile devices were not entitled to recovery for that unscheduled, overtime work. Agreeing with the trial court’s decision that the City was not aware of the overtime work, and that the employees were not prevented or discouraged from reporting off-duty work time and seeking pay, the court ruled that the City should not be held liable.

In the decision, the court stated that the City would have been liable for unpaid wages it knew or should have known about the work at issue through the exercise of “reasonable diligence.” Under the Fair Labor Standards Act, an employer must pay for all work it knew or should have known was being performed. Moreover, an employer is considered to have knowledge of the work if it should have known about it through the exercise of reasonable diligence. The court’s decision further illustrates and offers guidance on how employers can exercise such reasonable diligence:

For instance, it is important that employers institute a method by which any time worked outside of the normal business day can be reported in order to be compensated. In this case, the court found that the City of Chicago exercised diligence by allowing employees to submit “time due slips” on which they listed their off-duty hours worked along with a brief, albeit vague, description of the work performed.

Employers should also establish a reasonable policy and process for employees to report uncompensated work time after noticing a shortfall in pay. Such a process might involve an employee handbook provision that instructs employees to carefully review their paychecks, every pay period, to ensure that the paycheck accurately reflects all time actually worked. The handbook should also instruct employees to contact human resources or another appropriate member of management if a paycheck is short.

Lastly, in order to avoid landing on the wrong side of a legal decision, employers must take employee complaints under such a policy seriously by thoroughly investigating and adjusting compensation due when it is determined that there is a shortfall in the employee’s pay.

Bottom Line: Bearing all of this in mind, especially in the modern workplace, employers that have hourly employees who check e-mail, make calls, or conduct any other work outside of normal business hours on their cell phones, must heed the Seventh Circuit’s guidance by implementing and enforcing strong and clear policies that meet the “reasonable diligence” standard to ensure that employees are properly compensated for all hours worked.

The U.S. Supreme Court Ruling Paves Way for Wage and Hour Plaintiffs to Win Class Action Cases

Contributed by Julie Proscia

On Tuesday March 22, 2016, the U.S. Supreme Court ruled against one of the world’s largest food processors, affirming a $5.8 million judgment.  This ruling just made it a little bit easier for wage and hour plaintiffs to win class actions.  In a 6-2 decision the Court held that plaintiff employees can use averages and other statistical analyses to establish class liability.

In 2007, workers at one of the meat-processing facilities sued the company for uncompensated wages alleging that they were entitled to overtime pay and damages because they were not paid for time spent donning and doffing (time spent putting on and taking off protective equipment and walking to work stations).

pay overtimeIn order to establish the time spent donning and doffing, plaintiffs utilized individual timesheets, as well as, an average of time spent donning and doffing. The averages were based on the timesheets and the calculations from 744 observations of employees.  The Iowa jury found in favor of the plaintiffs and awarded $2.9 million in unpaid wages. An additional 2.9 million dollars in liquidated damages was subsequently awarded. In 2014 a split 8th Circuit Appellate panel upheld the judgment.

When the case came before the U.S. Supreme Court, the defendant argued that the usage of averages in statistical data was improper. Specifically, they argued against the use of averages as the time it takes an individual to put on and remove protective gear and walk to the assigned areas varies between individuals. The majority of the Supreme Court did not agree with this argument and instead indicated that averages would not even be necessary if the defendant had maintained proper records. In doing so, the Court essentially held that there is no general rule barring the use of statistics to prove class-wide liability in a class action such as this one.

The Supreme Court decision is a reminder to not only compensate for time spent donning and doffing but to keep proper time records. The failure to do so can result not only in wage and hour damages but liquidated damages.

 

Too Hot in the Kitchen for Restaurant With Prior Notice from the DOL of Wage Violations

Contributed by Heather Bailey

restaurant kitchenA recent case out of the Northern District of Texas demonstrates just how important it is to listen to the Department of Labor (DOL) when they come knocking on your door.  (Solano v. Ali Baba Mediterranean Grille, Inc., 2016 BL 62687, N.D.Tex. No. 3:15-cv-00555, 3/2/16). Here, the DOL investigated allegations against the restaurant for failing to track time records, failing to properly pay a chef for the time he spent traveling between restaurants and improperly paying overtime on a bi-weekly basis instead of weekly. The DOL informed the restaurant of its improper pay practices, but was not sufficiently staffed for the DOL to take on the chef’s case. The chef ended up suing the restaurant in federal court on his own behalf and other employees.

Generally under federal law, the look back period for a non-willful wage violation is 2 years. However, when the employer’s actions are found to be willful – meaning it either knew or showed “reckless disregard” for the law – a court may look back into the employee’s work history for 3 years to determine damages. The court here found that a reasonable jury could find the restaurant’s violations “willful” because the DOL put it on notice that the restaurant was not properly paying this chef.

Practice Tips: Once the Department of Labor puts you on notice that you are improperly paying your employees and you do not heed its advice, it is a hard argument to win later down the road in court that you did not do so willfully. All this does is subject you to increased damages and penalties. Due to the nature and nuisances in the restaurant industry like proper roll out and administration of the tip credit and tip pools, we recommend you work with your legal counsel under the attorney client privilege to best determine how you are going to pay various categories of employees (e.g., chefs, bussers, servers, bartenders, door men and management).