Good Time Keeping System Saves Employer from FLSA Liability

Recently the United States Court of Appeals for the Sixth Circuit held in White v. Baptist Memorial Health Care Corp, that the trial court properly dismissed an employee’s Fair Labor Standards Act (“FLSA”) claim for unpaid time during meal breaks where the employee failed to record her time worked as required by her employer’s policy.  The employee received an unpaid meal break during her shift.  As an emergency room nurse, the nature of the employee’s work often prevented her from taking a meal break at a set time.  The hospital automatically deducted time for the meal break from the employee’s daily time record.  The hospital’s time keeping policy required that employees be compensated if the employee was required to work during the designated meal break.  Employees were instructed to record all time spent performing work during meal breaks in an “exception log,” whether the meal break was partially or entirely interrupted and were paid for all time recorded on the exception log.  The employee signed a policy acknowledgement and admitted that when she followed the policy she was paid for time worked during meal breaks.

Many Department of Labor (“DOL”) investigators target automatic meal deduction systems to support FLSA violations.  Where DOL investigators find that an employer has an automatic policy, investigators routinely question employees to determine whether the employee has worked through a meal break without compensation.  Although not a per se violation of the FLSA, automatic meal deductions systems create risk.  A number of investigators and courts have found FLSA violations because employees subject to automatic deduction system have not been properly paid for all hours worked.  With the policies in place, DOL investigators question whether these policies and pay failures are systematic.  If determined to be systematic, investigators often expand their investigation to other employer locations. 

The Sixth Circuit’s decision, although not binding authority in Virginia, reminds that automatic meal deduction systems are lawful under the FLSA as long as the employee is compensated for time spent predominately for the employer’s benefit during the automatically deducted period.  The plaintiff in White stopped using the exception system and then sued her employer for unpaid wages for hours she allegedly worked during meal breaks.  The Sixth Circuit ruled for the employer and reasoned that, “[u]nder the FLSA, if an employer establishes a reasonable process for an employee to report uncompensated work time, the employer is not liable for non-payment if the employee fails to follow the established process.”  The Court noted that employees prevent the employer from knowing when it is obligated to pay employees and thwart the employer's ability to comply with the FLSA if they fail to follow the employer’s reasonable time reporting procedures. 

Under the FLSA, employees may testify as to their “recollection” during trial to prove the number of hours they worked but for which they were not compensated.  If the employer does not maintain proper records of the hours the employee worked, an employee’s “recollection” of hours worked can be sufficient proof to prevail in an FLSA case for unpaid wages.  In White, the plaintiff employee could not recall the hours worked during the meal breaks.  Therefore, the employee did not meet her burden of proof.

For more information regarding compliance with the FLSA or other employment laws, please contact Betsy Davis (804) 697-2035 or Elliot Fitzgerald (804) 697-2043.

Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.