Compliance

You Need to Pay Employees if You Know, or Should Know, They Are Working Overtime

By Jon Hyman

Jul. 30, 2015

Consider Garcia v. SAR Food of Ohio (N.D. Ohio 7/6/15) a cautionary tale.

SAR owns and operates food-court Japanese restaurants. The court previously certified a state-wide collective action for employees who were not paid for post-shift overtime. The named plaintiffs alleged that they were often required to stay past the scheduled end of their shifts, without compensation, to clean or serve expected waves of potential customers. SAR argued that the claims could not proceed because it maintains a policy that requires employees to check their weekly time records, manually enter any changes, and sign off on the records as correct. If the employees had followed that procedure, SAR argued, they would have been paid for all overtime. Indeed, as the court noted, many employees admitted that when they followed this procedure, SAR paid them for the time worked beyond their scheduled shift.

Nevertheless, the district court refused to dismiss the claims, concluding, “Although Plaintiffs did not follow established procedures that allowed Plaintiffs to claim added overtime pay, genuine issues of material fact remain as to whether Defendant SAR Food nonetheless knew or should have known that Plaintiffs were not being properly paid for all hours worked.” In explaining its rationale, the court quoted from the FLSA’s regulations:

[I]t is the duty of management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them. The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.

Employers, you cannot turn a blind eye to your working employees. If you know, or should know, that employees are working “off-the-clock,” or otherwise working without compensation, you must pay them. Your remedy is disciplining the employees for performing unauthorized work, or otherwise not following your procedures for reporting working time or scheduling overtime. As this case illustrates, if you fail to pay under these circumstances, you are taking a huge wage-and-hour risk.

Jon Hyman is a partner in the Employment & Labor practice at Wickens Herzer Panza. Contact Hyman at JHyman@Wickenslaw.com.

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