Labor Law Bulletin: Avoiding Claims for Off the Clock Work
By James Harwood – CEO, Total HR

In a recent lawsuit against Taco Bell, the company was ordered to pay millions of dollars to settle claims by hourly employees for failure to pay for work performed “off the clock”. In this case, thousands of hourly employees complained that their managers had required them to work before and after their scheduled shifts without being paid. Some employees claimed that they were directed not to clock in when business was slow but to remain on the premises in case business should pick up. Taco Bell ended up settling – facing millions of dollars in claims – and promised to take steps to prevent similar acts in the future. This lawsuit provides a good reminder to all of us who manage hourly employees to know and follow a few simple rules.

Under a federal law known as the Fair Labor Standards Act (FLSA), employers must pay for all hours worked. The key issue is what counts as “hours worked”. Hourly employees must be paid for all hours their manager “permitted” them to work. Whether or not the employee actually recorded the hours on their timecard is not decisive. If a manager knew, or should have known, through the exercise of reasonable diligence that hours were being worked, an employer is obligated to pay for them.

As laid out in the Department of Labor’s guidelines, “It is the duty of management to exercise its control to see that the work is not performed if it does not want it to be performed. The mere promulgation of a rule against such work is not enough. Management has the power to enforce the rule and must make every effort to do so.”
As managers, you should be aware of how these claims can arise in your environment. For instance, when managers constrain discretionary spending, such as overtime, employees may mistakenly feel pressure to work “off the clock” to complete their tasks. In other instances, employees may drive themselves to work “off the clock” before or after work or at home to distinguish themselves from their peers. These practices could result in employee claims if they aren’t managed carefully.

PRACTICAL TIPS FOR AVOIDING CLAIMS
• Make your expectations clear and remind hourly employees to record all hours worked accurately, NO EXCEPTIONS
• Don’t allow an employee to “volunteer” to work off the clock in his or her job
• Require hourly employees to get pre-authorization from their manager to work overtime
• Keep a look out for telltale signs of unauthorized overtime: hourly employees who you see at
work early, late, on weekends, or working through lunch
• Take steps to pay employees for all hours worked when you learn about them
• With help from your HR Specialist, take the appropriate steps to discipline employees for working
overtime without authorization or off the clock
• Contact an HR Manager at Total HR with any questions you have about these labor law issues,
or if you have a situation you fear may put you at risk for violation of this labor law