In Perry et al. v. City of New York, the Second Circuit upheld a large jury verdict in favor of a collective of workers regarding off-the-clock work. In doing so, the Court reaffirmed the principle that employers will ordinarily not be liable under the FLSA when employees fail to follow a reasonable process to report time worked.
Many wage-and-hour lawsuits involve "off-the-clock" claims—allegations that employees performed work outside of their recorded working hours for which they were not compensated. One issue that often arises in such cases is whether the employer is liable for work not recorded by employees in the timekeeping system.
In Perry v. City of New York, a certified collective of 2,519 EMTs and paramedics for the New York City Fire Department sued under the FLSA, contending that they were not compensated for all overtime worked because their various pre- and post-shift activities was not counted as time worked. After a rare collective action trial, the jury found these activities were compensable and awarded the plaintiffs $17,780,063 for unpaid overtime, liquidated damages, and attorneys' fees.
The City appealed, arguing that it was not liable because the plaintiffs did not record the time spent on these activities in the City's timekeeping system, such that it could not have known that the plaintiffs performed such work or failed to receive compensation for it.
The Second Circuit upheld the jury award, but reaffirmed principles favorable to employers. It explained that compensable work under the FLSA is work that employers require, know about, or should have known about. Thus, employees' failure to report overtime work, for example by failing to include it on their time sheets, "will in many circumstances allow the employer to disclaim the knowledge that triggers FLSA obligations."
One caveat to this principle is if the employer otherwise had notice of the work. The court held that there was sufficient evidence for this caveat to apply in this case. Specifically, there was evidence showing that the collective members could not have performed their jobs without completing these pre- and post-shift activities, and that they had complained to supervisors about being uncompensated for performing them. Thus, according to the court, the City should have been aware that compensable work was being performed.
The City made another argument: even if it had notice of the pre- and post-shift activities, it was unaware that collective members were not paid for such work. The court rejected this argument, holding that "knowledge of non-payment is irrelevant to FLSA liability." In other words, if an employer is on notice that work is performed, the employer must ensure that such time is compensated.
Perry is a good reminder that employers can protect themselves from FLSA liability through sound wage-and-hour practices. One way discussed by the court is by establishing "a reasonable process for an employee to report work time," because "an employer with such a system will not ordinarily be chargeable with constructive knowledge of unreported work." But the Second Circuit explained that such a process must be administered so as not to impede "employees' ability to report their work, such as by surreptitiously deleting overtime requests, punishing workers who ask for overtime pay, or otherwise discouraging employees from reporting." It is therefore critical for employers to train supervisors and non-exempt employees on what work activities are compensable and how to report work time outside their normal work shifts, and to ensure that employees are not impeded from reporting work time. By establishing robust reporting procedures, employers can protect themselves from liability for off-the-clock work.
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