Employee’s Failure to Record Time Worked at Home Dooms Unpaid Overtime Claim

By | January 2nd, 2013 | General

It is the employer’s obligation to keep accurate time records for employees. Most employers’ timekeeping systems, however, rely to some degree on the employees to properly record their time — whether by clocking/logging in and out, or submitting a paper timesheet. What happens, then, when an employee fails to report all of his or her time and then later makes a claim for unpaid overtime? Given that the employer both has the obligation to keep accurate records and to pay for all time worked, would the employer not be liable for the unpaid time?

According to the Tenth Circuit in a recent case, the answer is actually “no” where the employer had no knowledge that the employee’s records were incomplete/incorrect. A similar answer was also recently reached by the Sixth Circuit. In Brown v. Scriptco, LLC, there was no question that the employee had worked overtime. However, the Tenth Circuit found that the employer’s failure to pay overtime did not violate the Fair Labor Standards Act because the employee had not reported the time by recording it in the employer’s time-keeping system (which was accessible even from home where the plaintiff apparently worked the overtime). According to the Court, the low burden typically in unpaid overtime claims only applies when the employer fails to keep accurate records. Here, the employer had an accurate time-keeping system and it was accessible to the employees, even from home. Although the employer knew the employee was working from home, the employer did not know that the employee was not accurately recording his time. In these circumstances, the employee could not come back later and make a claim for unpaid overtime.

What does this mean for employers? First, it means that employers should be diligent in keeping accurate time records for their employees. This means providing a system for employees to accurately record all hours worked and making that accessible to employees who perform “work” when not in the office. Of course, if any manager or supervisor learns of an employee working from home (which could include making or receiving work-related calls/emails to the employee during traditionally non-working hours), that manager/supervisor should be trained to report that time as hours worked so that the employee can me paid for it and counsel the employee to keep accurate records. Second, it means that an employee cannot bring a claim for unpaid overtime when they have hindered his/her employer in keeping accurate records by providing inaccurate or incomplete information. Of course, if there is any direct or indirect “encouragement” by a manager/supervisor to report time incorrectly (e.g., “just report 8 hours a day”), then it is not likely that an employer will escape liability for the unpaid overtime.

Wage and Hour issues continue to be an area of significant focus by federal and state agencies via audits and a big area of litigation by employees. Employers should seek experienced legal counsel to ensure that their timekeeping and pay systems are in compliance with this very complicated set of laws. As evidenced by the recent Brown case, strong recordkeeping policies and practices and training of managers and supervisors can be invaluable when defending a wage and hour case. For assistance on a wage and hour or other employment issue, contact the Employers Legal Resource Center at 405-702-9797.

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