Sixth Circuit: No Employer FLSA Liability if Employee Fails to Follow Reasonable Procedures to Get Paid

Last week, the Sixth Circuit affirmed summary judgment for an employer on a claim under the Fair Labor Standards Act (FLSA) brought by a Emergency Room nurse who was not paid for missed meal breaks.  White v. Baptist Memorial Healthcare Corp., No. 11-5717 (6^th Cir. 11-6-12).  The employer utilized an automatic meal deduction system whereby 30 minutes of pay was automatically deducted from an employee’s pay unless he or she notified the employer that he or she missed her meal period.  Such systems are lawful under the FLSA.  Because the plaintiff could not prove that the employer knew or had reason to believe that she was working through unpaid meal breaks, she could not prove that the employer violated the FLSA.   It was not enough to prove that the employer had medical records showing when she was working and should have known that she was working through meal breaks. “Under 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.” In other words, “[w]hen the employee fails to follow reasonable time reporting procedures she prevents the employer from knowing its obligation to compensate the employee and thwarts the employer’s ability to comply with the FLSA.”

 According to the Court’s opinion, the plaintiff signed for a copy of the employee handbook which,

stated employees working shifts of six or more hours receive an unpaid meal break that is automatically deducted from their pay checks. The handbook also provided that if an employee’s meal break was missed or interrupted because of a work related reason, the employee would be compensated for the time she worked during the meal break. [E]mployees 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.

The plaintiff was aware of the policy and often used to follow it by recoding missed meal breaks in the exception log.  She also knew and utilized the employer’s policy “to report and correct payroll errors. If there was an error, she could report the mistake to a nurse manager who would resolve the issue” immediately.  She alleged: 

that when she reported missing a meal break, which her entire nurse unit missed as well, she was compensated for her time. She also states that there were occasions where she individually missed meal breaks but was not compensated. But on at least one occasion when she reported missing a meal break individually, she was compensated for her time. From time to time she told her supervisors that she was not getting a meal break and she also told [the] human resources department. However, she never told her supervisors or the human resources department that she was not compensated for missing her meal breaks. (emphasis added).

At some point, she stopped recording her missed meal breaks in the exception log and did not otherwise keep track of or remember her missed meal breaks.  She never notified anyone in management about the missed meal breaks or to correct any payroll errors when she was not paid for missed meal breaks.

The Court noted that automatic meal deductions are lawful under the FLSA:

An automatic meal deduction system is lawful under the FLSA. See generally Hill v. United States, 751 F.2d 810 (6th Cir. 1984) (The U.S. Postal Service’s automatic 30 minute lunch deduction system was upheld against a FLSA suit brought by a postman plaintiff where he claimed that he was continuously on duty during his mealtime and should be compensated for his mealtime.). “Time spent predominantly for the employer’s benefit during a period, although designated as a lunch period or under any other designation, nevertheless constitutes working time compensable under the provisions of the [FLSA].” F.W. Stock & Sons, Inc. v. Thompson, 194 F.2d 493, 496-97 (6th Cir. 1952) (citation and internal quotation marks omitted). “As long as the employee can pursue his or her mealtime adequately and comfortably, is not engaged in the performance of any substantial duties, and does not spend time predominantly for the employer’s benefit, the employee is relieved of duty and is not entitled to compensation under the FLSA.” Hill, 751 F.2d at 814. A de minimis rule applies when “the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours.” Id. at 815. Compensation is necessary “only when an employee is required to give up a substantial measure of his time.” Id.

The issue was whether the employer knew or had reason to believe that the plaintiff was working through unpaid meal breaks.  The Court decided to analyze the case the same as a claim for unpaid overtime.  As noted by the Court:

There is a dearth of case law on compensation for missed meal breaks under the FLSA as compared to the case law on unpaid overtime. But “[a] claim for non-payment of work during an established mealtime is analytically similar to an unpaid overtime claim.” Hertz v. Woodbury County, 566 F.3d 775, 783 (8th Cir. 2009) (citation omitted). Since “[t]he gravamen of [White’s] complaint is that [she] performed ‘work’ during mealtimes, [she is essentially arguing] that the work amounted to overtime because it was in addition to their already-scheduled, eight-hour shift, and the work during these mealtimes went uncompensated.”

As reflected in the Hertz case,  

The FLSA’s standard for constructive knowledge in the overtime context is whether the County ‘should have known,’ not whether it could have known.” Id. at 782 (citation omitted). It went on to say, “It would not be reasonable to require that the County weed through non-payroll CAD records to determine whether or not its employees were working beyond their scheduled hours. This is particularly true given the fact that the County has an established procedure for overtime claims that Plaintiffs regularly used.” Id. (citing Newton, 47 F.3d at 749).

Likewise, in the Newton case, “[t]he issue was not if the officer’s City supervisor “could have known that [the officer] was working overtime hours,” but “whether he should have known.” Id.”  As explained by the Ninth Circuit: “[t]he relevant knowledge is not ‘I know that the employee was working,’ but ‘I know the employee was working and not reporting his time.’” Raczkowski v. TC Const. Co., Inc., 8 F.3d 29 (table), 1993 WL 385483, at *1 (9th Cir. 1993) (citing Forrester). “And an employee cannot undermine his employer’s efforts to comply with the FLSA by consciously omitting overtime hours for which he knew he could be paid.” Id.

 At the end of the day, the plaintiff showed that she was paid when she notified the employer that she was not getting paid when she worked through meal breaks.  However, she alleged that it should still be liable when she failed to notify them about her unpaid working time even though there was no reasonable way for the employer to know that she was not being paid for missing her meal breaks.   The Court refused to find that the plaintiff’s situation was similar to other plaintiffs where the employer had prevented the employee from reporting overtime because there was no evidence here that the defendant employer had ever discouraged her from utilizing the exception log (other than a post-deposition affidavit which flatly contradicted her deposition testimony).

 

Baptist established a system to compensate its workers for time worked during meal breaks. When White utilized the system she was compensated and when she failed to use the system she was not compensated. Without evidence that Baptist prevented White from utilizing the system to report either entirely or partially missed meal breaks, White cannot recover damages from Baptist under the FLSA.

The Court also affirmed the court’s denial of the class-action status:

White bears the burden of showing that she and the opt-in plaintiffs are similarly situated. However, the district court properly dismissed her FLSA claim. Therefore, “[w]ithout a viable claim, [White] cannot represent others whom she alleged were similarly situated.” In re Family Dollar FLSA Litigation, 637 F.3d 508, 519 (4th Cir. 2011). Just as opt-in plaintiffs are not similarly situated to a lead plaintiff if their claims are dismissed, O’Brien, 575 F.3d at 586, a lead plaintiff cannot be similarly situated and represent opt-in plaintiffs without a viable claim. In re Family Dollar FLSA Litigation, 637 F.3d at 519. Since White cannot meet her burden that she is similarly situated to the opt-in plaintiffs because her FLSA claims were dismissed, decertification was proper.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.