In White v. Baptist Mem'l Health Care Corp., No. 11-5717, (6th Cir. Nov. 6, 2012), the Sixth Circuit held that a nurse's failure to take advantage of the time recording system offered by her employer to enter the hours that she worked during meal breaks precluded her from bringing a Fair Labor Standards Act ("FLSA") collective action for unpaid wages.
Margaret White was an emergency room nurse and hourly employee at Baptist Memorial Health Care Corp. ("Baptist") for two years. Baptist had a policy providing that employees who worked shifts of six or more hours would receive an unpaid meal break that was automatically deducted from their pay checks. Further, if an employee missed a meal break or it was interrupted for work-related reasons, the employee would be compensated for the time worked during the meal break. Baptist employees were supposed to record all time spent performing work during meal breaks in an "exception log," whether the meal break was partially or entirely interrupted. White acknowledged this policy, and she had in the past recorded missed meal breaks and was compensated. In addition, White was aware of Baptist's procedure for the reporting and correcting of payroll errors, which errors were corrected immediately.
From time to time, White told her supervisors and the human resources department that she was not receiving meal breaks. However, she stopped reporting her missed meal breaks in the exception log or via the payroll error reporting procedure, and she never told them she was not compensated for missing her meal breaks.
In 2008, White filed suit in the U.S. District Court for the Western District of Tennessee at Memphis, alleging that Baptist failed to compensate her for working during her meal breaks in violation of the FLSA. White moved for and was granted partial conditional certification. Ultimately, however, the district court granted Baptist's motions for summary judgment and decertification of the class.
White challenged both decisions on appeal, and the Sixth Circuit affirmed both. In the summary judgment decision, the Sixth Circuit employed the "knew or should have known" standard from unpaid overtime cases alleging that employees worked off the clock, and held that the issue was whether Baptist knew or had reason to know it had not compensated White for working during her meal breaks. Because White never told her supervisors that she was not compensated for missing her meal breaks, Baptist should not have known she was not compensated.
Acknowledging a "dearth" of case law on compensation for missed meal breaks, the Sixth Circuit analyzed White's claim pursuant to Fifth, Eighth and Ninth Circuit unpaid overtime cases, which cases it found to be analytically similar, given that White's uncompensated work was in addition to her scheduled 8-hour shift. Those cases all held that employees who failed to report overtime using their employers' established procedures could not recover under the FLSA, because the employer did not know, nor should it have known, of the work; in other words, it did not "suffer or permit" the overtime. See Hertz v. Woodbury County, 566 F.3d 775 (8th Cir. 2009); Newton v. City of Henderson, 47 F.3d 746 (5th Cir. 1995); Forrester v. Roth's I.G.A. Foodliner, Inc., 646 F.2d 413 (9th Cir. 1981).
Notably, in two of the cases, there was evidence that the employers had some degree of access to non-payroll records which showed the employees were working overtime. However, "access to records indicating that employees were working overtime . . . is not necessarily sufficient to establish constructive knowledge." Hertz, 566 F.3d at 781-782 (citing Newton, 47 F.3d at 749). Rather, the FLSA's standard for constructive knowledge in the overtime context is whether the employer "'should have known,' not whether it could have known." Hertz, 566 F.3d at 781-782; accord Newton, 47 F.3d at 749.
Relying upon the foregoing precedent, the Sixth Circuit held that if an employer establishes a reasonable process for an employee to report uncompensated work time, the employer is not liable under the FLSA for non-payment if the employee fails to follow the established process. In White's case, Baptist had such a process, and when White used the system, she was compensated. Without evidence that Baptist discouraged her from reporting time worked during meal breaks, or evidence that Baptist otherwise knew that she failed to report such time, White could not recover FLSA damages.
With respect to the decertification decision, the Sixth Circuit, relying on the Fourth Circuit's decision in In re Family Dollar FLSA Litigation, 637 F.3d 508 (4th Cir. 2011), held that decertification was proper because lead plaintiff White "could not be similarly situated and represent opt-in plaintiffs without a viable claim."
As FLSA cases alleging uncompensated time for missed meal breaks proliferate, White is an important appellate decision that extends the well-established principles for determining if an employee worked off the clock to the area of missed meal breaks, at least where the employers have procedures for employees to report uncompensated work time. This decision is a victory for a common-sense principle that employees cannot undermine employers' efforts to comply with the FLSA by not reporting overtime hours for which they should be paid. Likewise, employers do not violate the FLSA when they do not pay for overtime hours of which they have no actual or constructive knowledge. Nevertheless, employers must continue to compensate all overtime hours worked of which they know or should know, and not allow employees to perform overtime work without proper compensation, even if the employees do not claim the overtime.