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Computer Usage Records Not Enough to Place Employer on Notice of Unauthorized Overtime

    Client Alerts
  • March 09, 2016

Under the Fair Labor Standards Act, employers are liable for payment of overtime to covered employees. This requirement applies to time that is not specifically authorized by the employer if it is “suffered,” meaning that the employer knew or should have known that the employee worked this additional time. Last month, the Fifth Circuit Court of Appeals addressed whether an employee’s use of the company’s computer system placed the employer on notice that she was working overtime.

In Fairchild v. All Am. Check Cashing, Inc., the plaintiff was a management trainee who worked as the sole manager on duty in a branch operation. The employer’s policy prohibited employees from working overtime without prior approval from a supervisor. While the plaintiff received pay for authorized overtime, she sued claiming entitlement to pay for additional hours not reported through the specified timekeeping system.  The district court dismissed the complaint, concluding that the defendant never had constructive knowledge of the additional overtime hours worked.

On appeal, the Fifth Circuit affirmed this decision. The court rejected the plaintiff’s argument that the company’s computers showed her use of the system for hours exceeding those reported through the timekeeping software. Although the employer could have discovered such information, mere access to it was not enough to impute constructive knowledge that she was working additional overtime. The plaintiff never introduced evidence that the employer instructed her not to report actual overtime hours worked.

This decision is a rare victory for employers in suffered overtime cases. In most circumstances, the plaintiff can produce evidence that a supervisor should have known that the employee was working unauthorized overtime because he or she actually observed the plaintiff at work during these time periods. However, in situations where the employer can demonstrate a lack of reasonable knowledge of the additional time worked, the fact that company records may reveal such facts if searched will not be adequate to impute constructive knowledge of the unauthorized overtime hours.