Employers in Massachusetts must pay their hourly employees overtime compensation for all hours worked over 40 in a workweek. “Hours worked’ applies to hours an employee is actually working; if an employee is on break, the employer need not count break time towards the 40-hour calculation, even if the break is paid. A recent Appeals Court decision highlights the importance of keeping accurate records of all hours worked by employees, including meal breaks, to determine when overtime compensation is due. Failure to do so can lead to a costly wage and hour lawsuit.
Donna Vitali was an hourly employee who was scheduled to work 9am to 5pm, five days per week, with a one-hour paid lunch break. At the company, as required by law, if an employee worked through lunch, the time worked would be counted towards the forty-hour overtime threshold. According to Vitali, she regularly worked through lunch breaks, even though she did not record that time in the company’s timekeeping system. However, the company’s electronic timekeeping system only allowed employees to punch in and punch out at the beginning and end of the day. In order to record time spent working during lunch, the employees had to follow a complicated set of instructions and use a dropdown menu to record that time. If an employee took the full lunch break but did not use the dropdown menu and merely punched in and out at the start and end of the day, there was a discrepancy between the hours that the employee “clocked” using the timekeeping system and the hours that the employee actually worked. For example, if an employee worked nine to five, five days per week, and took her one-hour paid lunch each day, she would only work 35 hours, but her timekeeping record would reflect 40 hours clocked. Thus, when employees did not use the dropdown menu to reflect that they performed work during their lunch break, the the employer would assume that its employees did not work through lunch, and would pay overtime only for hours “clocked” over 45 in a workweek. When Vitali filed a lawsuit seeking overtime compensation, the trial court judge dismissed her claims before trial reasoning that Vitali could not establish that the company knew or should have known that she was working overtime because she failed to record lunch work time using the timekeeping system and because the company had a policy prohibiting employees from working overtime without prior authorization. Vitali appealed to the Massachusetts Appeals Court.
The Appeals Court disagreed with the trial court. In doing so, the court found that the company knew or should have known that Vitali was working through all or part of her lunch break. Specifically, the company admitted that Vitali often ate at her desk; that she received work-related assignments throughout the day; that on at least one occasion she contacted someone about how to record lunch work time (although her request mostly went unanswered); and that the company policy requiring prior approval to work overtime was not consistently enforced. Furthermore, although the company maintained that it was fair to assume that Vitali didn’t work during lunch time because she did not report it as hours worked using the dropdown menu in the timekeeping system, the court disagreed, reasoning that the instructions the company had provided regarding the dropdown menu were confusing. Additionally, the instructions conflicted with an announcement made around the same time indicating that employees did not need to record their lunch time. Lastly, the court noted that it is an employer’s responsibility to ensure that its timekeeping records of all hours worked are accurate. Now, unless the case settles, Vitali’s claims will proceed to trial. The case is Vitali vs. Reit Management & Research, LLC.
The bottom line is that employers need to ensure that they have a straightforward timekeeping system to accurately record all hours worked by an employee. If these records are not accurate, an employee may bring a lawsuit seeking overtime compensation, and the employer won’t have any accurate, documentary evidence to rely on in its defense. This means a jury or court generally will be entitled to take the employee’s word for how much the employee worked, which can lead to a costly judgment against the employer.