In White v. Baptist Memorial Health Care Corporation, 2012 U.S. App. LEXIS 22752 (6th Cir. Nov. 6, 2012), the U.S. Court of Appeals for the Sixth Circuit held that, if an employer establishes a reasonable process for an employee to report work performed during unpaid breaks, it is not liable for non-payment if an employee fails to report the work performed through the established process. This is a welcome decision for employers, who increasingly are targeted with claims that they “should have known” about unreported off-the-clock work allegedly performed by employees.
Baptist Memorial Health Care Corporation provides employees at its various hospitals with an unpaid 30-minute meal break each workday. As is common in many industries, the hospital automatically deducts the unpaid meal break from employees’ hours worked. In the event employees perform any work during their meal breaks, they are instructed to report such work through exception procedures made available by the hospital. These exception procedures vary from department to department and may consist of writing down meal-break work in a formal log, submitting a written note to a supervisor, or verbally informing a supervisor of the work performed.
In White, the plaintiff reported work performed during meal breaks on several occasions, both when her entire nurse unit performed meal-break work and when she did so individually. The plaintiff was compensated for the work reported on such occasions. However, she unilaterally stopped reporting her meal-break work and therefore was not compensated for such work because the hospital did not know of it. There was no evidence that the hospital instructed the plaintiff to stop reporting her meal-break work or that she was otherwise discouraged from doing so.
The plaintiff filed a collective action under the FLSA, arguing the hospital’s automatic deduction policy results in employees not being paid for meal-break work. She maintained that the automatic deduction policy unlawfully “shifts the burden” of ensuring employees are paid for all time worked from an employer to its employees. She further argued that the hospital knew or should have known about work performed during meal breaks that went unreported.
The Court Decisions
The district court granted summary judgment to the hospital on the plaintiff’s claim, finding that the hospital had no reason to know of her unpaid meal-break work because she failed to report it. It also decertified the collective action on two grounds – first, because the plaintiff was not similarly situated to the opt-in plaintiffs in light of the dismissal of her claim and, second, because the opt-in plaintiffs’ claims were based on disparate factual and employment settings and were not tied together by a common FLSA violation.
In a 2-1 decision, a three-member panel of the Sixth Circuit affirmed both rulings on appeal. Regarding summary judgment, the Sixth Circuit held that “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.” The court reasoned that, by failing to use such reporting procedures, an employee “prevents the employer from knowing its obligation to compensate the employee and thwarts the employer’s ability to comply with the FLSA.” In this case, the plaintiff unilaterally stopped reporting meal-break work even though she had been compensated when she reported such work in the past. Moreover, although the plaintiff had complained to management about having to perform work during meal breaks, she never indicated that she was not reporting this work or that she was not being compensated for it. Accordingly, the majority held that the plaintiff was not entitled to recover for her unpaid meal-break work as a matter of law.
Because the majority found that the plaintiff had been properly dismissed from the case, it found that she could not be similarly situated to the opt-in plaintiffs and affirmed decertification on this basis.
White represents a significant victory for employers. Plaintiffs who disregard procedures to report off-the-clock work often try to rescue their claims by arguing that their employer “should have known” about the alleged off-the-clock work. The Sixth Circuit has made clear that this tactic will not succeed if an employer makes the necessary arrangements for employees to report off-the-clock work. Accordingly, employers are encouraged to maintain a formal process for reporting off-the-clock work, educate employees on the process, encourage employees to use the reporting process, and ensure that employees are compensated for work reported.