On July 22, 2013 a former nurse asked the U.S. Supreme Court to resolve a circuit split, which she claims the Sixth Circuit created when it found that the nurse's admitted failure to follow the hospital's procedures for logging interrupted meal breaks and correcting payroll errors precluded her from seeking damages under the Fair Labor Standards Act (FLSA).
Executive Summary: On July 22, 2013 a former nurse asked the U.S. Supreme Court to resolve a circuit split, which she claims the Sixth Circuit created when it found that the nurse's admitted failure to follow the hospital's procedures for logging interrupted meal breaks and correcting payroll errors precluded her from seeking damages under the Fair Labor Standards Act (FLSA).
Facts of the Case
Plaintiff Margaret White worked as a nurse in the defendant hospital's emergency department for two years. Upon her hire, the hospital provided White with an employee handbook stating that employees working shifts of six or more hours receive an unpaid meal break that is automatically deducted from their paychecks. The handbook further stated that, if an employee's meal break was missed or interrupted due to work-related reasons, the employee would be compensated for the time worked during the meal break. The hospital instructed employees to record all time spent working during meal breaks in an exception log. White signed a document stating that she understood the meal break policy.
White recorded in the exception log occasions when her meal break was partially or entirely interrupted. White conceded that, when she reported missing a meal break that her entire nurse unit missed as well, the hospital compensated her for her time. White claimed that there were occasions when she individually missed meal breaks but was not compensated, though she conceded that she was compensated for at least one occasion when she individually missed a meal break. From time to time, she told her supervisors and the human resources department that she was not getting a meal break. However, she never told her supervisors or the human resources department that she was not compensated for missing her meal breaks. Eventually she stopped reporting her missed meal breaks in the exception log, contrary to the hospital's instructions. White admittedly did not remember and had no records of when her meal breaks were interrupted and the hospital failed to compensate her.
White admittedly knew the hospital's procedure to report and correct payroll errors. If an error occurred, she could report the mistake to a nurse manager who would resolve the issue. White conceded that when she used this procedure, the errors were handled immediately. However, White did not utilize this procedure to correct the interrupted meal break errors that she failed to report because she felt it would be "an uphill battle." White sued the hospital alleging FLSA violations and moved for conditional class certification, which the district court granted in part and denied in part. The district court ultimately granted the hospital summary judgment on White's claims, and it also granted the hospital's motion for decertification.
Sixth Circuit's Decision and White's Appeal
In its November 2012 opinion, the Sixth Circuit affirmed the district court's decision in favor of the hospital. The Sixth Circuit noted that the issue was whether the hospital knew or had reason to know it was not compensating White for working during her meal breaks. In short, the Sixth Circuit found that there was no way the hospital should have known White was not being compensated for her missed meal breaks, because White admittedly did not follow the hospital's procedures for being compensated for interrupted meal breaks. In addition, each time White followed the hospital's procedures for being compensated for interrupted meal breaks or for payroll errors, White was compensated. The Sixth Circuit concluded that, without evidence the hospital prevented White from utilizing the system to report either entirely or partially missed meal breaks, White could not recover damages from the hospital under the FLSA.
In discussing its decision, the Sixth Circuit cited overtime cases from the Eighth and Fifth Circuits finding that employers merely having access to records indicating employees were working overtime did not constitute constructive knowledge that the employees were working overtime, particularly when the employer had specific procedures for the employees to follow in order to be paid overtime and the employees ignored those instructions. The Court also noted a Ninth Circuit opinion holding that "where 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 FLSA]." In finding that White's failure to abide by the hospital's timekeeping and payroll error procedures precluded her from seeking damages under the FLSA, Sixth Circuit favorably cited an Eighth Circuit decision ruling that "[t]he FLSA's standard for constructive knowledge in the overtime context is whether the [employer] ‘should have known,' not whether it could have known." (Emphasis added).
On July 22, 2013 White filed a petition for certiorari asking the U.S. Supreme Court to resolve a circuit split on this issue of meal breaks and timekeeping. According to White, the Sixth Circuit's decision created a conflict with other circuits that have found that employers cannot avoid liability under the FLSA by delegating record keeping to its employees. In support of her petition, White cites cases from the Second, Fifth, Eighth, Ninth, and Eleventh Circuits as well as cases from the U.S. Supreme Court. Contrary to the Sixth Circuit's ruling and those cited in its opinion, White claims that the employer has a duty to investigate and to pay employees for time actually worked if the employer has reason to suspect that an employee is working overtime.
Employer's Bottom Line: Employers should establish and clearly communicate policies setting forth the procedures employees should follow in recording their time, seeking compensation for overtime and missed meal breaks, and bringing payroll errors to their employers' attention. We will continue to keep you updated on this developing issue. If you have any questions, please contact Tom Keim, tkeim@fordharrison.com, who is a partner in our Spartanburg office, Kristin Gray, kgray@fordharrison.com, who is an associate in our Spartanburg office, any member of FordHarrison's Long Term Care Practice Group, or the FordHarrison attorney with whom you normally work.