Volume 11, Issue 2
April 11, 2012
The U.S. Court of Appeals for the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin) ruled that an employee who clocked in early most days and performed some work before the start of her shift that was more than de-minimis was nonetheless not entitled to compensation under the Fair Labor Standards Act. Facts of the Case: In Kellar v. Summit Seating Inc. , the plaintiff, a non-salaried manager, regularly arrived at work between 15 and 45 minutes before the start of her 5:00 a.m. shift because she felt that it was too much of a "hassle" to try to get her subordinates set for their workday if she got there at 5:00 a.m. She spent the time unlocking the doors, reviewing and distributing the workload for the day, cleaning work areas, and taking time for a cup of coffee and a cigarette. Her time cards reflected that she often clocked in early. However, when she forgot to clock in she always wrote her official start time as the time in. The plaintiff acknowledged that employees often clocked in early and then socialized and admitted that she had, on occasion, reprimanded an employee for doing this. The plaintiff had no evidence that her supervisors ever personally observed her working before the start of her shift (they arrived at 7 or 8 a.m.) and she never told them that she did so nor did she report that her paychecks had errors because they did not compensate her for overtime. Nonetheless, after voluntarily resigning, she brought suit seeking compensation for unpaid overtime under the FLSA. The district court granted summary judgment in favor of her employer. The plaintiff appealed. The Court's Ruling: The Seventh Circuit affirmed. The court first rejected the employer's argument that the time was not compensable under the Portal to Portal Act (an amendment to the FLSA), which makes activities that are preliminary to the principle activity of work noncompensable. The court found that the work the plaintiff performed was "an integral and indispensable" part of her principal activity of work and therefore not preliminary. The employer argued, alternatively, that the time was not compensable because acts that are "predominantly spent in the employee's own interest" ( i.e. for her own convenience) are not compensable under the Portal to Portal Act. The court rejected this argument as well. Even though the plaintiff arrived at work to avoid the "hassle" of coming in at 5:00 a.m., the fact that the employee was performing work for which the employer received benefit was all that mattered (her subjective reasons for arriving early were not controlling). The court, however, ultimately affirmed summary judgment for the employer because the employee failed to prove that the company knew or should have known that she was performing work before her shift. Although employers are obliged to exercise control so that employees do not perform work that the employer does not request and cannot suffer or permit work without paying for it, the court noted that "the FLSA stops short of requiring the employer to pay for work it did not know about, and had no reason to know about." The court rejected the plaintiff's argument that the time cards she submitted each week constituted knowledge of her work given that, by the plaintiff's own admission, employees at the company had a habit of clocking in and then socializing. She also had no evidence her supervisors had actual knowledge of the off-the-clock work. In fact, over the course of her eight years of employment she never questioned her paycheck or claimed to have been denied overtime pay. Given the context, the court found that she was not entitled to compensation. Practical Impact: The employer in this case was fortunate in that its failure to proper police erroneous time card entries did not come back to "bite it." Indeed, laxness was the company's saving grace as its pattern of tolerating employees clocking in and socializing, coupled with the plaintiff's consistent failure to assert that her time card entries were accurate, obviated liability. The case, however, might well have been decided differently by another court. Employers are best served by insisting that employee time records accurately reflect actual hours worked. This HR Focus article was prepared by Elizabeth Torphy-Donzella of Shawe Rosenthal LLP, a member of the Worklaw® Network. Reprinted with permission.
KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.