Secretly Working Off The Clock—You Don’t Get Paid For That!

by Orrick - Global Employment Law Group
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Following principles that federal courts have applied in similar cases under the Fair Labor Standards Act, a California appellate court recently confirmed that employers are not liable under the California Labor Code for off-the-clock work that occurs without the employer’s actual or constructive knowledge. In Jong v. Kaiser Found. Health Plan, Inc., the California Court of Appeal for the First District affirmed the trial court’s grant of summary judgment for the employer, holding that the employee failed to set forth sufficient evidence to demonstrate that the employer actually or constructively knew that the employee worked unrecorded overtime.

To establish the employer’s actual or constructive knowledge that he was working more than the hours he reported, the plaintiff pharmacy manager relied on deposition testimony establishing that other employees in his position required more than 40 hours per week to perform their required tasks when previously classified as exempt salaried employees. The court held that this evidence was insufficient to create an issue of material fact as to the employer’s knowledge of the plaintiff’s alleged off-the-clock work occurring subsequent to reclassification of the pharmacy manager position to non-exempt. The court stated that although the deposition testimony may have provided notice that pharmacy managers worked more than 40 hours per week when they were exempt employees, it hardly put the employer on notice that when their classification was changed and they were directed not to work overtime without prior approval and to report any overtime that they did work, that pharmacy managers – and plaintiff in particular – failed to comply with those directives.

In support of his claims, the plaintiff also pointed to evidence demonstrating that he disarmed the alarm at his job site prior to the time he reported beginning his work. The court, however, held that this too was insufficient to create an issue of material fact regarding the employer’s actual or constructive knowledge because the alarm evidence did not show what the plaintiff was doing during the time between disarming the alarm and clocking in. And although the court noted that the summary judgment papers may have contained evidence that the plaintiff was working whenever the alarm was off, that information was not before the employer when paying the plaintiff—thus, it was reasonable for the employer to believe that the plaintiff did not begin or end work except as he reported.

There are at least two major takeaways from Jong. First, Jong makes clear that plaintiffs seeking to recover for off-the-clock work under California law must set forth evidence demonstrating that the employer had actual or constructive knowledge of the work. Evidence of what employees in the plaintiff’s position historically worked while classified as exempt employees will not suffice to create a triable issue of fact. Nor will evidence that establishes the employee’s presence at the job site be sufficient to survive summary judgment—the plaintiff must set forth some evidence that the employer knew or should have known that the employee was working at the time he was onsite. Second, for employers, Jong reiterates the importance of having a written policy prohibiting off-the-clock work and having employees sign written acknowledgments regarding those policies. In rejecting the plaintiff’s evidence of the employer’s alleged knowledge of off-the-clock work, the court stressed the plaintiff’s knowledge of the employer’s written policy that pharmacy managers should be clocked in whenever they were working and that the plaintiff signed a form attesting that he would not work off the clock. The holding in Jong thus illustrates the value and importance of policies prohibiting off-the-clock work.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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