The Court Turns the Tide of the Epidemic
For several years now there has been a veritable epidemic of class and collective actions filed against employers claiming that employees were not paid for working through their meal periods. These cases arose frequently where employees were subject to automatic meal period deductions of 30 minutes or more even when they worked or were interrupted – unless the employee reported that they actually did work. If anything, this rash of litigation sent a message to employers across the country that they need to be very careful in how they accounted for work being done during lunch periods so that employees could be properly paid for their time.
The tide is turning as courts faced with class action litigation involving hundreds if not thousands of potential plaintiffs began to look closely to see if the class members truly share a common employer-wide complaint or whether individual employees have individual complaints based on their own department’s approach to compensating for missed meal periods. One of the most recent court decisions favoring employers and denying class status was handed down by the Sixth Circuit Court of Appeals in the case of White v. Baptist Memorial Health Care. This case involved a hospital and its automatic deduction policy supplemented by its “Exception Log” practice of accounting for meal period interruptions.
The Employer’s Policy and Practice Makes a Class Action Inappropriate
In determining if a class of employees is entitled to pursue recovery of unpaid wages under the FLSA, the lead plaintiff bears the burden of showing that the employees are in fact all similarly situated to each other. The lead plaintiff in this case failed to do that. The court ruled that the lead plaintiff’s FLSA claim was without merit and dismissed it on summary judgment. The hospital in this case had an established policy of making automatic deductions for 30-minute meal breaks unless the employees used the Exception Log to record the time spent working during the meal period. When they did that, they would be paid. All of this was covered during orientation and was specifically set out in the Employee Handbook, which employees acknowledge by signing a receipt. The lead plaintiff admitted that she sometimes used the Exception Log and when she did she was paid. She also admitted that sometimes she didn’t use the Exception Log because she felt it would be an “uphill battle.” However, there was no evidence that the hospital knew or should have known that work was being performed or that the hospital discouraged the employee from properly reporting her time. Consequently her claim for unpaid meal periods was dismissed. Once a lead plaintiff’s case is dismissed, that employee can no longer be “similarly situated” to other employees who might have valid claims.
The Court Provides Helpful Direction
In denying class status in this case, the Court makes several findings that can guide employers in making sure that their policies and practices will hold up against a class or collective action complaint over missed meal periods. Here is what the Court said:
- An automatic meal deduction system is lawful under the FLSA;
- If an employer establishes a reasonable process for an employee to report uncompensated work time, then the employer is not liable for non-payment if the employee fails to follow the established process;
- Liability can arise if the employer discourages an employee from reporting interrupted meal periods;
- Compensation is necessary only when an employee is required to give up a substantial measure of his or her time;
- Merely having access to records indicating that employees were working overtime is not necessarily sufficient to establish constructive knowledge on the part of the employer that work was being done;
- Constructive knowledge of employer hinges on whether the employer “should have known” about the time being worked and not whether the employer “could have known”; and
- Where an employee deliberately prevents the employer from acquiring knowledge about how much time was being worked, there is no violation and the employee cannot recover.
Lessons for Employers
From this and other recent cases employers can take away these lessons:
- Establish a clear policy and practice for reporting interrupted meal periods;
- Obtain employee acknowledgement of the system;
- Train managers and supervisors;
- Don’t discourage the use of the system; and
- Pay for the meal periods when reports are made.
If you have any questions feel free to contact Steve Lyman at slyman@wp.hallrender.com or your regular Hall Render attorney.
