Avoid “Off The Clock” Claims Through Written Policies

An “off the clock” claim occurs when the employee claims more time worked that what appears on their daily time record. The time records show one thing but the employee claims they worked more hours. Sometimes those “off the clock” hours result in an overtime claim.

And believe it or not as a California employer you are at risk of such “off the clock” claims, particularly if you don’t have appropriate written time keeping policies in place and enforce them.

In a recent case the employer prevailed against the employee. But that’s only because they had appropriate and effective written policies in place.

Jong v. Kaiser Foundation Health Plan, Inc. (5/20/2014)

Kaiser had classified its pharmacy managers as salaried exempt employees. As a result, Kaiser did not pay its pharmacy managers for overtime. The pharmacy managers worked on average 50 hours per workweek. As a result of a wage and hour class action lawsuit, Kaiser reclassified its pharmacy managers from exempt to non-exempt and began paying the pharmacy managers on an hourly basis.

Kaiser also then instituted written policies prohibiting their non-exempt pharmacy managers from working overtime without prior approval. This is a common employer policy.

Kaiser went further, however – no doubt because of the class action lawsuit – and had the pharmacy managers sign a form called “Attestation Form for Hourly Managers and Supervisors – Working Off-the-Clock Not Allowed.” This is not normally something an employer would do unless it had reason to believe its employees were in fact working off the clock.

So what did Jong do? What every employee looking to retire off their employer does.

Jong happened to be one of the pharmacy managers employed during the class action lawsuit. Jong decided to file a second lawsuit against Kaiser, also on a class action basis, complaining that now he couldn’t work overtime, but Kaiser still required him to do all his work (heaven forbid!). He had to finish his work in 8 hours per day and 40 hours in a workweek. Not sure what else Jong expected as result of his cohorts filing a class action lawsuit.

Problem is Jong had no proof that Kaiser knew or should have known he worked off the clock or proof that Kaiser had a policy of having pharmacy managers work off the clock. To the contrary, Kaiser had a express policy forbidding “off-the-clock” work (see “Attestation Form” referenced above).

The court sided with Kaiser and cited the general premise:

[W]here an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of [the law].

Thank you very much. The court tossed Jong’s case out of court thereby denying him the ability to act as a class representative on the class action claims.

But note the court also noted, “This is not to say that an employer may escape responsibility by negligently maintaining records required by [the law], or by deliberately turning its back on a situation” [i.e. if the employer fails to maintain accurate time records or knows or should know the employee is working “off the clock].

Lessons Learned

So what can you do as a California employer to avoid off the clock claims? The same thing every California employer can do:

• Have a fool proof mechanism to record all actual hours worked for non-exempt employees to the minute;
• Have written policies and procedures regarding the non-exempt employees’ obligation to record all of their time worked, including start and end times, start and end of meal periods during the workday, all other time out for non-working time;
• Have a policy that all overtime worked must be approved in advance in writing;
• Enforce on a regular basis all time keeping policies and procedures;
• For every payroll period, have employee attest under penalty of perjury the detailed time record they submit includes all hours worked, they have not worked any time not reflected on the time record, they understand their right to take rest/meal/recovery periods and they have taken all such rest/meal/recovery periods;
• Do not “look the other way” when employees are working when they are not clocked in and take affirmative steps (in writing) if you know it’s happening;
• Issue itemized statements (aka paystubs) that accurately reflect all actual hours worked and all other detailed requirements set forth in Labor Code section 226.

Failure to take your wage and hour responsibilities seriously as a California employer is an invitation to have your business shut down from a devastating employee wage and hour lawsuit, or worse, class action lawsuit.