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Managers Can No Longer Say They Didn’t Know Employees Were Working Overtime

Frustrated businessman in officeFrustrated businessman in office

If you have non-exempt employees reporting to you, do you know exactly how many hours they’ve been putting in? Are you sure?

“This can be more complicated than it seems, even when people punch a time clock,” says Richard Millisor, a partner in employment law firm Fisher Phillips. “In white-collar jobs, it gets even trickier.” Wage-and-hour lawsuits, already at record highs, will probably keep soaring after new federal overtime rules kick in later this year, if only because many more employees will be eligible for overtime pay.

For now, a decision from the 6th U.S. Court of Appeals in Ohio has put liability for overtime squarely on employers who “should have known”—by way of “the exercise of reasonable diligence”—whether an employee was working more than 40 hours a week. That applies even if the employee didn’t claim overtime pay for the extra hours, and even in companies with a formal no-overtime policy.

Here’s what happened: A bookkeeper hired in 2010 at a trucking company in Columbus, Ohio, often put in more than 40 hours a week. She kept detailed records of the time she worked and entered her time sheets into the company’s payroll system. However, she mistakenly thought she was ineligible for overtime, so she failed to charge the higher rate for her extra hours, getting straight hourly pay instead. This went on for several years. When she later realized her mistake, she sued the company for the overtime pay she should have put in for originally.

Her boss’s defense: He didn’t know she was working overtime. Not good enough, says the decision in Craig v. Bridges Brothers Trucking LLC (6th Cir.,No. 15-3396), noting that the bookkeeper’s “time sheets alone establish…that she is entitled to overtime.” The company’s owner said that he never saw those time sheets because, when he reviewed the weekly payroll, he looked only at a summary report that didn’t show the hours worked by individual employees. The court found that he should have used “reasonable diligence” and looked more closely at exactly who was working when.

“This case puts employers on notice that they have to be proactive about keeping precise track of people’s time,” says Millisor. For managers whose to-do lists already seem endless, he adds, “it’s one more thing not to lose sight of.” Ah, just what you needed.