Off-Clock Work and FLSA Rules

Wednesday, July 28, 2010

Some employers are famous for working employees “off the clock” and not paying them for those undocumented hours. This is certainly more of an issue with hourly workers rather than salaried employees. The most famous of these employers appears to be Wal-Mart. Over the last decade, Wal-Mart has faced a number of employee lawsuits over its failure to pay for time worked by employees either before they clocked in or after they clocked out. Federal and state labor law generally speaks to the fact that work of economic value to the employer is work for which wages must be paid.

Bloomberg reporters Lauren Coleman-Lochner and Margaret Cronin Fisk in an article dated June 12, 2007, reported that Wal-Mart was facing over 70 wage and hour lawsuits. In a New York Supreme Court decision, Justice Richard M. Platkin in Albany, New York, denied class-action status to a group of Wal-Mart employees. However, on the same day, Wal-Mart had lost efforts to undo approvals of employee class actions over pay in Missouri and New Mexico. In these suites, Wal-Mart employees alleged that managers required employees “skip meals and breaks and falsified timecards”.

Was this some isolated action by a few store managers striving to keep their labor costs down? Retail often has very tight margins, and a discounter like Wal-Mart would certainly have razor thin mark-ups on product. On the other hand, was it a systemic feature ingrained into the culture of Wal-Mart. It is immaterial as far as the Fair Labor Standards Act (FLSA) and the respective state labor laws are cornered. What are the “facts and circumstances” of the specific events.  For the purposes of time worked, the Fair Labor Standards Act (FLSA), defines “work hours” to mean “time spent by employees performing work for their employers for which they are entitled to compensation.”

As to the question of missed break and meal periods, the “Fair Labor Standards Act (FLSA) does not require employees be given meal or rest breaks.” However, if short breaks (less than 20 minutes), these short break times are considered time worked. Furthermore, meal periods (of at least 30 minutes), “are generally not time for which employees must be compensated.” Therefore, since FLSA generally does require break and meal periods, we must turn to the respective state law for guidance. For example, in the state of Missouri, the Department of Labor states that:

“Missouri law does not require employers to provide employees a break of any kind, including a lunch hour. These provisions are either left up to the discretion of the employer, can be agreed upon by the employer and employee, or may be addressed by company policy or contract.”

Therefore, for the purposes of break (rest) and meal periods, neither the US nor the state of Missouri requires that either a break or a meal period be provided to employees (exceptions apply for youths). While break or meal periods may not be required, nevertheless, employees are required to be paid for the time they work.

In reviewing the “facts and circumstances”, the court will review the time records supporting the employer’s position that employees were paid for their time worked. The employees are going to testify that they were told not to clock-in or to clock-out and return to work. If the employees’ allegations that they were not paid for the time is persuasive, the court may find in their favor. One reason why Justice Richard M. Platkin denied class-action status to the New York Wal-Mart employees was:

``The facts and circumstances surrounding the allegedly unpaid work vary substantially from associate to associate,''

A nice way of saying that the employees’ stories did not pass the “reasonableness” test.