The Secret Overtime Worker

falling treePhilosophers and employment lawyers have pondered these two conundrums for years: (1) if a tree falls in the forest and no one hears it, does it make a sound? and (2) if an hourly employee works overtime, but no one is aware of it, is she entitled to overtime pay?

The Update is here to resolve both of these quandaries, once and for all.

First, yes, of course the tree makes a sound.  It’s a physical fact.  Cracking wood emits sound waves even when we humans aren’t there to hear them.  (Update drops the microphone, Bam!)

Second, no, overtime pay is not due if the employee performs the work secretly and against employer policy, so long as the employer is not made aware – actually or constructively — of the extra hours worked.  At least that was the answer of the United States Court of Appeals for the Fifth Circuit in a January decision, Fairchild v. All American Check Cashing, Inc. There the court decided the appeal of a manager trainee who claimed she worked overtime to “get the job done,” but did not report it to anyone. This extra overtime violated company policy that required advance authorization before any work was done.  Moreover, the employee could not show that the company had “constructive knowledge” of her alleged overtime work (an employer is liable to pay wages, including overtime, for any work that it “suffers or permits” to occur, even if not authorized), as she performed the work after she had clocked out, without informing anyone.

The employee claimed that All American Check Cashing “should have known” she was working overtime, because it had access to computer usage records that reflected her after-hours work. But the court held that mere ability to access such information is insufficient to show that the employer knew or should have known about the extra hours. Apparently the employee was unable to put forward any evidence that company management actually was aware of her overtime work, which is unusual in these cases.  Also harmful to the employee’s claim was the fact that she had reported and been paid for certain overtime hours.

So, some helpful takeaways from this walk through the overtime woods:

  • Employers should adopt a policy that prohibits overtime work without authorization to best limit and control overtime. But, be aware that the employer will still be on the hook if it knows the overtime work is being performed, even if not authorized, and it does nothing to stop it.
  • If an employee does feel that she has to work overtime, she should promptly report it on her time sheets — or to human resources if she is being forced to work “off the clock” by her local manager(s) — to ensure the employer has knowledge of all hours worked, and the hours get paid. Secretly performing the work, but not reporting it, may leave the employee standing empty-handed in the lonely, quiet forest, as in Fairchild.
  • Although ignorance was bliss for All American Check Cashing, employers are, generally, better off taking steps to monitor employee computer usage and after hours work to ensure no unauthorized work is being performed off the clock – and creating a risk of liability.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLCFor more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.


Ban the Box, Binding Arbitration Agreements, FLSA Requirements

New Year’s Resolutions to Stay Out of Trouble at Work in 2016

office partyyyy

With the New Year upon us, this is the perfect time to consider whether your employment policies and
practices need updating or fine-tuning.  Based on recent developments in the law and our experience advising hundreds of employers and employees in 2015, here are five recommended New Year’s Resolutions to stay out of trouble at work:

  1. Consider implementing mandatory and binding arbitration agreements for your workforce, including express waivers of the right to a jury trial and the right to participate in collective or class actions. Per our previous Updates, these agreements must be properly drafted to be enforced, but, if that is done, then they can help an employer avoid thousands and even millions of dollars in legal fees, liabilities and management headaches.
  2. Prepare for Overtime-ageddon. President Obama and the U.S. Department of Labor have proposed new regulations under the Fair Labor Standards Act that would more than double the minimum base salary required for the most common exemptions to overtime pay.  Although recent reports indicate the regulations will not be finalized and take effect until late this year or early 2017, now is the perfect time to audit your company’s wage and hour compliance and take steps to make any cost-saving changes and workforce adjustments before the new, tougher regulations take effect. Updating job descriptions is one powerful step that can support appropriate wage and hour classifications.
  3. Be nicer to job applicants. Numerous states and cities recently have adopted strict measures limiting what and when employers can ask job applicants about their criminal records.  Be sure your company complies with these various “ban the box” laws.  Also check your company’s compliance with the federal Fair Credit Reporting Act, which requires mandatory disclosures and notices to employees whenever an employer seeks background checks by a third party on employees or applicants, or uses the results to make employment decisions.
  4. Keep up with the electronic age. Yes, Virginia, there is an Internet. Most workers are using electronics and mobile devices throughout the day, yet their employee handbooks are often still stuck in the horse-and-buggy days.   Do you have a “don’t text and drive” policy, as recommended by OSHA?  Are there written measures that protect your company’s electronic systems and data from internal misappropriation or external cyber-attacks?  What does your company do with the electronic data on an employee’s personal phone, tablet or computer when he or she resigns or is fired?  Are you limiting non-exempt employees’ after-hours access to work email to avoid potential wage and hour violations?  If you don’t know the answer to one or more of these questions, your company could be facing an expensive wake-up call.  Get help.
  5. Get more organized – find those employment agreements. Often when we are called on to help a client involved in non-compete litigation, we find that key employment agreements are missing or not signed.  This can be avoided by conducting regular reviews of personnel files to ensure all necessary documents and agreements are signed and preserved.  Not having the signed documents can severely hamper an employer’s ability to enforce its rights and protect itself from unfair competition and stolen trade secrets.  This simple annual review can be conducted by a clerical employee and do not require legal fees or expenses.  Do it now, and avoid that painful “D’oh!” moment in the future.

Bonus resolution, free to subscribers:

  • Do not procrastinate. The Update staff needs to work on this one, as this article was supposed to go out in December!

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLCFor more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.


Wrongful Termination

Forced Overtime Creates Wrongful Termination Claim for Pa. Healthcare Worker

The presumption of employment at will is “extremely strong” in Pennsylvania, and courts are reluctant to recognize exceptions where an employee may claim “wrongful termination.”  But the Pennsylvania Superior Court opened the door a crack this month by holding that a health care worker who was terminated for opposing mandatory overtime had a claim for wrongful termination, even though future claimants might not.

The Pennsylvania Statute on the Prohibition of Excessive Overtime in Health Care (aka “Act 102”) took effect in 2009 and provides that certain health care facilities cannot require certain employees to work in excess of an agreed, predetermined and regularly scheduled daily work shift.  Act 102 covers hourly and non-supervisory employees who provide direct patient care or clinical care.  The law also prohibits retaliation against an employee who objects to or opposes unlawful overtime.

In Roman v. McGuire Memorial, decided November 9, the Superior Court affirmed a trial court’s decision that Brandy Roman, a “direct care worker” at a residential care home for the mentally retarded, could make out a claim of wrongful termination in violation of public policy. She refused mandatory overtime on four days in 2011, and was fired as a result.  The court noted that Act 102 provides a clear statement of public policy, prohibiting covered employers from retaliating against employees for opposing mandatory overtime.  The employer, McGuire Memorial, argued that since Act 102 included provisions to create regulations to cover claims under the law, Ms. Roman and others like her could not bring a common law claim for wrongful termination.  But the court rejected that argument, noting that until the Department of Labor implemented final regulations on July 9, 2014, aggrieved workers like Ms. Roman had no way to vindicate their rights (other than through a wrongful termination suit).  Since Ms. Roman filed her suit prior to the effective date of the regulations, she had a viable wrongful termination claim, the court held.

So where do future claims under Act 102 stand, now that the final regulations have been implemented?  The new regulations do not state that they provide an “exclusive” remedy for violations, but state court precedents suggest that, if grievants have an avenue of relief under the statute, then wrongful termination claims might no longer be viable.

Regardless of whether Roman v. McGuire Memorial turns out to be a significant exception to the employment at-will doctrine, covered health care employers in Pennsylvania should take heed that (1) they cannot mandate overtime for healthcare employees and (2) they cannot retaliate against those who refuse to accept overtime assignments. Like most laws, Act 102 has numerous exceptions and limiting definitions, and employers therefore should review its requirements carefully to ensure that their overtime policies and practices do not violate the law.

Michael Homans is a Labor & Employment attorney and founding partner of HomansPeck LLCFor more employment law updates, including news and links to important information pertaining to legal developments that may affect your business, subscribe to Michael’s blog, or follow him on Twitter @EmployLawUpdate.