Documenting Efforts to Comply with the FLSA May Help Limit Damages Exposure
With all of the media attention on imminent changes to the Fair Labor Standards Act (FLSA) and the incredible increase in wage and hour litigation, it is a good time to review employees’ exempt/non-exempt classification and ensure that timekeeping and pay practices are in line with the requirements of the FLSA. A recent case from the Fifth Circuit illustrates why it is important for employers to document their good faith efforts to comply with the FLSA.
In Miles v. HSC-Hopson Services Company, no 14-1137, 2015 U.S. App. LEXIS 16216 (5th Cir. 2015), the plaintiff filed a claim for unpaid overtime. He claimed that although he was required to report to the employer’s premises at 7:30 AM, he was not paid for the half hour he spent loading up his truck with tools needed for the day and traveling to his first job. This amounted to 30 minutes of unpaid time at the beginning of each work day. He also claimed that he was not paid for the time spent traveling from his last job of the day back to the employer’s shop and unloading his truck, allegedly another 30 minutes each day.
An employee’s claim for unpaid wages under the FLSA is limited to two years, unless the employer’s conduct is determined to be “willful.” In that event, unpaid wages can be assessed for a three year period. An FLSA violation is willful if the employer either knew, or showed reckless disregard for whether, its conduct violated the FLSA. In the Miles case, the employer testified that he did not consult an attorney or the Department of Labor, but instead relied upon an unnamed “E-law website” when setting up his timekeeping and pay practices. The trial court found that this was “willful” conduct, and the Fifth Circuit Court of Appeals agreed. This finding meant that the employer’s exposure period for unpaid overtime increased to three years.
The absence of “reckless disregard” can be demonstrated by consulting with counsel, reviewing the DOL website, calling the local DOL office or attending a seminar. Randomly checking on the internet at a website you are unable to identify years later in litigation is not a good way to avoid a finding of reckless disregard for the requirements of the FLSA. Had the employer reviewed the DOL website or called an attorney, he surely would have learned about 29 CFR 785.38, which clearly states the rule that travel between worksites during the course of the day is all paid time, and when an employee is required to start and stop his day at the employer’s premises, travel between the worksites and the employer’s premises is considered “hours worked” that must be paid. This case illustrates that there is a real benefit to careful analysis of FLSA exemptions, timekeeping and pay practices.