Perhaps the most dangerous strain of overtime claims to defend are so-called “off the clock” claims. These claims typically include allegations that non-exempt employees worked outside of their normal working hours – at night, on weekends, at customer sites, etc. – and were not fully compensated for all of these hours.
Often, these claims are made even though the same employees completed timesheets that include the number of reported hours worked and, in some instances, even overtime hours worked. A classic example is a non-exempt employee who records, say, 42 hours on his/her timesheet in a given week, but later alleges that he/she actually worked 47 hours but was afraid to report the additional five hours for fear of incurring the wrath of a supervisor.
How are employers supposed to defend assertions of unpaid overtime made months and, in some instances, years after the hours were allegedly worked?
Employers have two choices. First, they can throw up their hands and assume that there is no solution for “off the clock” overtime claims. Second, they can establish a set of best practices to minimize the likelihood that off the clock claims will be filed in the first instance and, if they are asserted, to maximize the chances that they can be successfully defended. The first option, of course, is no option at all. Employers that want to proactively address this issue should consider the following:
1. Review job descriptions to make sure that employees are properly characterized as exempt or, as the case may be, non-exempt.
2. Update the existing overtime policy to specifically reference when and under what circumstances non-exempt employees are permitted to work from home, remotely, or otherwise outside of the employer’s offices in order to address the issue of “off the clock” claims.
3. Update the handbook policy concerning the reporting of hours to state that each time non-exempt employees submit their time, they are representing they have accurately and fully reported all hours worked, and that they understand that no manager is authorized to instruct them not to record and report all of their hours.
4. Explain the overtime policy during the orientation process, and require non-exempt employees to sign an acknowledgement form that verifies their understanding of the policy.
5. Train managers on how and under what circumstances overtime may be worked, as well as the approval process for working overtime.
6. Use a Timesheet Certification for non-exempt employees that contains an appropriate representation regarding the accurate reporting of hours.
7. Monitor the amount of overtime actually worked.
8. When in doubt, employers that have reason to believe overtime was worked should ordinarily compensate non-exempt employees for the time spent, but also counsel them regarding the overtime policy and the steps that need to be taken before overtime can be worked in the future.
9. Review existing Employment Practices Liability Insurance (EPLI) policies to determine whether coverage for overtime claims (and, specifically, for defense costs, settlement, and indemnity) exists.
Non-exempt employees are certainly entitled to be compensated for all hours that they work. That said, non-exempt employees should also fully and accurately report all of the hours that they work when they work them. Employers should not be placed in the position of trying to prove a negative (i.e., that an employee did not actually work hours that he/she did not contemporaneously report) months and sometimes years later.
Educating employees on policies and procedures for working overtime at the inception of employment; training managers on handling overtime requests; and properly holding non-exempt employees accountable for accurately, fully, and contemporaneously reporting all of the hours that they work will help to ensure that employees are properly, fairly, and fully compensated in a timely manner.