• Employer’s Lack of Knowledge Renders Employee’s “Work” Not Compensable, Federal Appeals Court Rules
  • December 27, 2011 | Authors: Jeffrey W. Brecher; Paul DeCamp; Richard I. Greenberg; Noel P. Tripp
  • Law Firms: Jackson Lewis LLP - Melville Office ; Jackson Lewis LLP - Reston Office ; Jackson Lewis LLP - New York Office ; Jackson Lewis LLP - Melville Office
  • An employee is not entitled to compensation under the Fair Labor Standards Act where the employer did not know or have reason to know the employee was working before the official start of her shift, a federal appeals court in Chicago has ruled.  Kellar v. Summit Seating Inc., 2011 U.S. App. LEXIS 24745 (7th Cir. Dec. 14, 2011).  Accordingly, the Court affirmed summary judgment for the employer.

    Susan Kellar worked as a sewing manager for Summit Seating, a small manufacturer of seating for buses, trucks, and vans.  She sued the employer for violation of the FLSA for failure to pay her overtime.  Kellar claimed she regularly arrived at Summit’s factory “between 15 and 45 minutes before the start of her 5:00 a.m. shift.” She characterized her activities upon arrival as follows:

    ...about 5 minutes unlocking doors, turning on lights, turning on the compressor, and punching in on the time clock. Then she prepared coffee for the rest of Summit’s employees, which took her about 5 minutes. Depending on her workload, she spent 5 to 10 minutes (or longer) reviewing schedules and gathering and distributing fabric and materials to her subordinates’ workstations, “so that they could go straight to work, rather than waiting for [her] to bring [fabric] to them.” For another 5 minutes, she drank coffee and smoked a cigarette. The remaining time was spent performing “prototype work” (preparing models for production), cleaning the work area, or checking patterns.

    Kellar conceded that “no one told her that she needed to come in before her shift, but she arrived early because it would have been ‘a hassle’ to show up at 5:00 a.m. and still get her subordinates up and running close to the start of their 5:00 a.m. work shifts.” In addition, she would sometimes punch in early (as was common among Summit’s employees), but when she forgot to do so she would write the “official” shift start time on her timesheet (i.e., 5 a.m.).  Finally, she did not complain at any time that her paycheck did not capture her hours of work completely.

    The lower court granted summary judgment for the employer, holding that Kellar was not entitled to compensation for the alleged pre-shift work.  Kellar appealed to the Seventh Circuit. For purposes of the appeal, the parties did not dispute whether or not these activities took place.  The legal questions before the Court were (1) whether the activities were “preliminary” and thus excludable from hours of work under the FLSA on that basis; (2) whether the time was “de minimis” and thus not compensable; and (3) whether Summit had “suffered or permitted” the work so that the work is deemed compensable.

    The appellate court answered the first two questions in the negative, finding Kellar’s activities neither preliminary nor de minimis.  On the third question, the Court also answered in the negative.  Kellar, the Court observed, was a manager and was aware of, and at times enforced, the employer’s policy of forbidding unauthorized overtime.  She knew the hours of her shift and participated in weekly meetings discussing the upcoming week’s schedule. Further, the Court noted, Kellar’s early punch-ins would not constitute notice to the employer of pre-shift work because early punching was a common practice at Summit’s place of business, and “clocking in early would not necessarily have alerted Summit that Kellar was performing pre-shift work.”  Thus, the Court concluded, “[Summit] had little reason to know, or even suspect, Kellar was acting in direct contradiction of a company policy and practice that she herself was partially responsible for enforcing.  Accordingly, no reasonable trier of fact could conclude that Summit had reason to know that Kellar was working before her shift.”  Moreover, the Court concluded, the FLSA does not require an “employer to pay for work it did not know about, and had no reason to know about.”

    The “suffer or permit” standard can render employee activities compensable even if members of management or others with authority are not expressly aware of the activities at the time they are performed.  Employers should consider reviewing their policies and practices to minimize the risk for liability of such work.