Mass.: Employer’s Timekeeping Failures Result in Trial of Overtime Claims

By Matthew J. Frankel and Jeffrey B. Gilbreth, Sep 11, 2015
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A recent decision of the Massachusetts Appeals Court provides a stark reminder to employers of their obligations to ensure that employees’ working hours are accurately recorded and paid.

A bookkeeper for a property management firm filed a lawsuit claiming that she and other employees frequently worked during their paid lunch hour but were not credited for this time. This resulted in unpaid overtime during certain weeks, the employee alleged. The employer countered that it had a strict rule prohibiting overtime without prior permission and that its timekeeping system provided a method for employees to record when they worked through all or part of their paid lunch hour, but the employee simply failed to do so.

The trial court granted summary judgment to the employer, holding that the employee “failed to produce evidence upon which reasonable jurors could conclude that the company knew or should have known that [she] had engaged in uncredited overtime.” The judge found that she had failed to report such overtime even though the timekeeping system allowed her to do so, and also found it “significant” that there was no evidence the employer had pressured her not to report time worked.

However, the Appeals Court reversed this ruling, holding that the employer had “not shown, as a matter of law, that it ha[d] satisfied its timekeeping responsibilities here.” The court found that “there plainly was evidence on which reasonable jurors could have concluded” that the company neither adequately “instructed employees to record lunch time work" nor “provided them an accessible and transparent means of doing so.” In support of this conclusion, the court noted evidence that the employer failed to explain the need to record lunch time work, that the process used to record lunch time work was difficult to understand, that the employer’s instructions for navigating this process were “contradictory, confusing, and incomplete,” that the company did not provide training with respect to this process, and that the employer was aware that employees were confused about recording lunch time work based on inquiries from plaintiff and others. “In short,” the court stated, “armed with at least constructive knowledge that employees were undertaking lunch time work that should have been credited toward overtime, the company went ahead and assumed in its favor that employees were not performing any such work except where they separately reported it through a process that [the employee] was never trained in, or even told to use.”

The result is that the employer now faces a trial—potentially including class claims—in which it could be held liable not only for unpaid overtime, but treble damages and the employee’s attorneys’ fees pursuant to the Massachusetts Wage Act.

What lessons should employers take away from this case? First, make sure your timekeeping system is transparent and user-friendly. Second, provide clear written instructions to employees on how to record their time worked. Third, offer training sessions on time recording for those who want them. These steps should go a long way toward defeating any future argument that employees were unable to determine how to record their time worked. Finally, employers should be vigilant in tracking and responding to employees’ questions or complaints about the timekeeping system. The receipt of more than a few timekeeping questions from employees should prompt the employer to take some or all of the steps above in order to mitigate the risk of a successful wage and hour suit in the future.

In short, if an employer has any indication that employees are not actually recording time worked, the employer should immediately investigate, correct any deficiencies in the timekeeping system or the information provided to employees about how to use it, and pay employees for any time worked (including overtime) that turns out to have been unpaid. In Massachusetts, the alternative—a burdensome lawsuit and potential liability for class claims, treble damages, and the other side’s attorney’s fees—is far too expensive to risk.

Vitali v. Reit Management & Research, Mass. Ct. App., LLC, No. 14-P-1304 (Aug. 21, 2015).

Matthew J. Frankel and Jeffrey B. Gilbreth are attorneys in Nixon Peabody’s Boston office. Republished with permission. © 2015 Nixon Peabody. All rights reserved.
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