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Employer Cannot Avoid Overtime Obligations By Playing Ostrich

If an employer knows, or has reason to know, that an employee is working overtime, that overtime must be paid.  In Craig v. Bridges Bros. Trucking LLC, No. 15-3396 (6th Cir. May 19, 2016), the Sixth Circuit concluded that a bookkeeper was able to pursue her Fair Labor Standards Act (FLSA) overtime pay claim because she presented sufficient evidence her employer should have known she was working more than 40 hours in a work week.

The Sixth Circuit explained that an employer has constructive knowledge of overtime hours if by exercising reasonable diligence it would have known an employee is working more than 40 hours per week.  This reasonable diligence test requires both employers and employees to recognize overtime work.

In this case, Ms. Craig reported every hour she worked but failed to submit any request for overtime work pursuant to established company process.  The employer had argued Ms. Craig misreported and/or miscalculated her time and that the company did not have any knowledge of her overtime work.

The Sixth Circuit did not buy the company’s argument, noting the employee’s hours worked were accurately reported, her mistake was not knowing to seek a different rate for the overtime hours, that the company’s owner regularly reviewed time sheets, the owner’s son saw Ms. Craig working weekends ,and he had warned his father to cap Ms. Craig’s hours at 40 per week.  The totality of these circumstances convinced the Sixth Circuit that the company knew, or at the very least, should have known, Ms. Clark was working overtime. Therefore, a jury will now have to decide if the company had sufficient knowledge about the overtime hours to be liable to her for overtime.

Employers cannot always bank on a failed request for overtime pay form (or similar document) as a basis to claim it did not have knowledge of overtime work.  The reality of the circumstances will dictate knowledge (or a reason to know).

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