Lawsuits against employers where employees claim to be owed for time they worked but which was not properly recorded are increasing. This article will summarize the problem for employers and offer a few practical tips for preventing or minimizing legal liability for the problem.

The basics

The Fair Labor Standards Act (FLSA) requires that most nonexempt employees be compensated no less than the federal minimum wage (currently $7.25 an hour) for all hours worked, at least 1.5 times their regular rate for any hours worked exceeding 40 in a workweek and that they keep accurate records of all hours worked.

Assuming an employer requires its employees to keep time records, employees who claim they worked additional time that was not captured on the time records and for which they were not compensated bear the initial burden of proving they actually worked that time.

If the employees present evidence of time record inaccuracies about which the employer knew or should have known, and as a result the employee's pay didn't meet the FLSA requirements, the burden shifts to the employer to prove the employee didn't actually work additional time. Meeting this burden of proof can be difficult for an employer.

What leads to an off-the-clock claim?

Typically, off-the-clock claims arise when an employer keeps what it believes are accurate time records but an employee alleges he/she actually worked more — often much more — than what is reflected on the time records. Some of the more common situations where the question of whether the employer knew or should have known of this purported off-the-clock time include:

• when an employee works through lunch and the employer has an automatic deduction for lunchtime
• supervisors directing or allowing employees to work prior to clocking in or after clocking out
• waiting for a computer to boot up to clock in for the day
• donning and doffing uniforms
• unpaid rest breaks

When is an employer expected to know that time was worked?

At what point does an employer become liable for an employee's time worked off the clock due to its knowledge — whether actual or constructive — of the time in question? The answer is when the employer "knew or should have known" about the off-the-clock work.

Ultimate liability depends on all of the relevant circumstances in a particular case but the employer's policy and practices.

Employers should have a policy that directs employees to accurately report all time worked, and to report if directed by a supervisor to work off the clock without reporting the time or if their time is improperly adjusted without their knowledge and consent. If an employer establishes a reasonable process for employees to report uncompensated work time, the employer may argue that it is not liable for nonpayment when an employee fails to follow the established process.

When an employee fails to report that he/she worked through lunch in contravention of an employer policy, and no other adverse circumstances are present, the employer can arguably avoid liability. But if an employer's acts or omissions led to the underreported time, it typically loses.

For example, if an employee alleges his supervisor directed him to clock out but continue working, it is virtually certain a court would not allow the employer to rely upon its written policy to escape a resulting FLSA claim.

Practical tips for avoiding or minimizing liability

Nothing guarantees a successful defense to an off-the-clock claim, because there is no surefire way to keep an accurate record of alleged "unreported" time. But the chances for a successful defense increase substantially when employers:

• Keep accurate records of time worked;
• Require employees to sign their time cards, time sheets or other summary reports verifying the accuracy of their time records for each pay period;
• Require supervisors of payroll clerks to sign time cards, time sheets or other summary reports verifying the accuracy of the time records for each pay period;
• Develop, explain and rigorously enforce a well-written policy requiring employees to accurately report all time worked, providing for a clear "pay correction" process and expressly prohibiting unreported work;
• Train managers on FLSA requirements, any applicable state or local wage laws, and company policies regarding proper timekeeping (and don't forget to document that training);
• Train employees in orientation and in dedicated meetings about the obligation to record hours worked accurately, what is considered "hours worked" that must be recorded, including time away from the employer's worksite, about the "pay correction" process; and to report whenever their manager or supervisor tells them not to record their hours worked (and don’t forget to document that training);
• Develop a track record of actually correcting time records and pay when employees report they work time that was not accurately recorded within a pay period;
• Develop a system that allows employees to keep accurate worktime records even when not in the workplace; and
• Discharge or, at a minimum, strongly discipline any manager who requires or permits employees to work off the clock, unilaterally decreases an employee’s worktime without concurrence by the employee, or fails to ensure non-exempt subordinates follow a well-crafted company policy requiring them to accurately record all time worked.

Finally, think about all of the sources of information that can be used to establish or recreate the time an employee worked, or to otherwise impeach the employee's testimony that he/she worked "80 hours a week, every week." To stay a step ahead, employers should review their processes to ensure they are able to retrieve, analyze and reproduce the records such as:

• building ingress/egress records
• computer log-in and log-out records
• reports that show the timestamp of the first and last emails sent each day
• video or surveillance footage of workplace entrances and exits
• company telephone logs
• GPS logs of company-controlled and owned vehicles
• time records of other employees in the same or similar positions
• time records of exempt individuals
• company-issued cellphone and text message records between employees and others