Constructive Knowledge of Overtime Work Sufficient for Wage Act Liability

by Robert P. Rudolph, Esq.

The Appeals Court of Massachusetts recently decided that an hourly employee who claimed that she was frequently pressured to work through her lunch break, which she took at her cubicle in the office, could sue her employer for unpaid overtime even though she did not record this extra time in the Company’s electronic timekeeping system, Kronos, which was used to punch in and out.  G.L. c. 151, Section 1A, the Commonwealth’s overtime pay statute, provides that most employees must be paid one and one-half times their regularly hourly rate for all hours worked in excess of forty (40) hours in a given week.

In the matter of Donna Vitali v. Reit Management & Research, LLC, Vitali sued her employer alleging she accrued overtime that was not credited by the Kronos system the company had in place to keep track of the employee’s hours.  Vitali worked nine to five, five days a week, with a one-hour paid lunch break each day.  She also often stayed late after work on days she worked through her lunch.  The company had a practice of paying overtime to hourly employees once they clocked forty-five hours for a given week, unless having reported work was done during the one-hour paid lunch.  She alleged she was required to work during her lunch breaks on average three to four times per week, as people would bring her assignments that required prompt attention.  In order to record time worked during lunch in the Kronos system, a special drop-down menu had to be used.  It was uncontested that Vitali never successfully used the drop-down menu to record the extra time worked during lunch..

Pursuant to the Fair Labor Standards Act, an employee must prove both that she incurred unpaid overtime work, and that the employer had actual or constructive knowledge that she was working overtime.  The employer tried to avoid the implication that it knew Vitali was performing work during her lunch breaks and stressed that it had a sternly worded policy requiring employees to obtain specific approval before working overtime.  The Appeals Court found the arguments unveiling, saying the Company failed to show the policy had any application to employees performing work during lunch and that the evidence actually showed employees had “general blanket approval for overtime.”  Further, evidence indicated that the Company had received multiple employee inquiries on how to record lunch time work and the Company’s payroll supervisor testified, without explanation, that she did not always provide such instructions to all individuals who inquired.

The Appeals Court held that where an employer had reason to know that overtime work was being done, or had the opportunity through reasonable diligence to acquire such knowledge, it cannot deny compensation even where the employee fails to claim the overtime hours.  Further, the Appeals Court opined that reasonable jurors could find that although the company had a way to record lunch time work, the written instructions were contradictory, confusing and incomplete and the company was armed with at least constructive knowledge that employees were undertaking lunch time work that should have been credited toward overtime.  Instituting and enforcing a strong policy prohibiting overtime without prior approval is an important first step, but once an employer has reason to suspect that an employee is working more than forty (40) hours in a week and allows it to happen, the employer risks liability if that employee is not paid overtime.