All too often, it seems I end up reporting about lawsuits or wage and hour investigations in which employers have done something wrong and end up paying the price. So it’s refreshing to be able to report two instances where employers did something right — and in both cases, it saved them a ton of money.
Brown v ScriptPro
In this case, both the plaintiff and the defendant acknowledged that Brown, a non-exempt employee, had done some off-site work but had not been paid for his time. But it turned out, the reason he hadn’t been paid was that he didn’t report the time!
Now, that isn’t an automatic “save.” If the employer “knew or should have known” about the work, they could still have been found liable for unpaid overtime. However, in this case ScriptPro had done not one, but several things right:
- They had a timekeeping system in place that the employee could access remotely.
- Their records were accurate, well organized and complete. (Well, with the exception of the alleged overtime hours that the employee failed to report…)
- ScriptPro’s policies required employees to record all time worked, and specifically and clearly prohibited “off-the-clock” work.
As a result, both the trial judge and the Tenth Circuit Court of Appeals ruled in favor of the employer. In fact, the appeals court judge wrote, “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.”
Beecher v Steak N Shake Operations, Inc.
In this case, the plaintiff sought conditional certification as a class for all hourly employees of Steak N Shake nationwide, claiming widespread issues with improper compensation. If it had been certified, the case would have ballooned from the initial 23 plaintiffs to a class of around 65,000 people.
However, the court refused to certify the class. The defendant company presented detailed evidence of it’s processes to help ensure all time worked is recorded, audit details to support any changes in employee time and explanations of the various circumstances that would lead local management to edit employee time records.
The judge noted that while there were similarities between job duties, methods of time tracking and internal reports from one restaurant to the next, the company had demonstrated that changes to employee time records were performed by individual store managers in response to specific situations. This meant there was not as much similarity between the situations of the 65,000 hourly employees as it might seem at first glance.
Beyond that, the judge noted that the employer’s records and documented procedures didn’t support the plaintiff’s claim of a “nationwide” policy that violated the FLSA.
Employers should take note. Here’s what you can do now to boost your company’s chances of a favorable outcome should you one day find yourself in a position like ScriptPro or Steak N Shake:
- Issue detailed policies and procedures that require accurate time entry by employees. Review your timekeeping and payroll policies with your labor law attorney to make sure they’re in compliance with all applicable federal, state and local laws. Don’t make any changes (no matter how minor they may seem) without clearing them through your attorney first.
- Maintain audit trails of any edits or changes made to employee time records. Include documentation to support the reason(s) for each edit.
- Investigate any claims of improper compensation promptly, and take appropriate action immediately if you discover local managers making unwarranted changes to employee time records.
What additional suggestions can you think of to help employers avoid liability?