11th Circuit Rejects “Not Our Fault” Defense
The Eleventh Circuit Court of Appeals recently held that an employer is not absolved from liability for unreported overtime under the Fair Labor Standards Act (FLSA) if it has actual or constructive knowledge that time records are inaccurate. The ruling in Bailey v. TitleMax of Georgia (No. 14-11747) reversed a lower court’s decision accepting the defense that an employee could not recover overtime pay because he underreported his own work hours.
In the TitleMax case, there was evidence that the employee’s supervisor encouraged the underreporting of hours to avoid paying overtime and occasionally edited time records after they had been entered. The Court of Appeals found that this showed the employer had either actual or constructive knowledge of the underreporting of work hours. According to the court, “[i]f an employer knew or had reason to know that its employee underreported his hours, it cannot escape FLSA liability by asserting equitable defenses based on that underreporting.”
The TitleMax case highlights the importance of maintaining accurate time records, ensuring that supervisors and managers are trained on FLSA requirements, and requiring non-exempt employees to accurately report all working time. This is one of the many areas in which our firm can provide guidance to reduce employers’ legal risk.