The U.S. Supreme Court has declined to review the Sixth Circuit Court of Appeals’ decision in White v. Baptist Memorial Health Care Corporation,* upholding summary judgment and dismissal of an emergency room nurse's Fair Labor Standards Act (FLSA) claim because she failed to follow procedures for reporting time spent working during automatically deducted unpaid meal breaks. Some commentators have seen this decision as partially recognizing a Faragher/Ellerth type affirmative defense in FLSA actions when employers have reasonable procedures for reporting time worked. That view may be a bit oversimplified, but the underlying decision does highlight how an employer may avoid potential FLSA liability by taking proactive steps to ensure that employees are appropriately paid for all time worked.

In November 2012, the Sixth Circuit affirmed summary judgment for the employer, finding that the hospital did not know and did not have reason to know the plaintiff was not paid for missed meal breaks because she failed to use an exception log to record the extra time worked. The evidence that led to this decision included: (1) a handbook provision stating employees would be compensated if they missed a meal break or it was interrupted because of a work-related reason; (2) instructions to employees to record all time worked during meal breaks in an exception log; (3) employee training about the meal break policy and exception log; and (4) a signed acknowledgement by the plaintiff stating she understood the meal break policy. Based on this record, the Sixth Circuit affirmed the district court’s dismissal of the plaintiff’s claim. 

In seeking certiorari review by the Supreme Court, the plaintiff argued that the Sixth Circuit created an “ill-defined” rule precluding employees from recovering under the FLSA if they fail to use an employer's “reasonable” process for reporting work time, regardless of whether the employer had actual or constructive knowledge of the unpaid work. The plaintiff claimed the Sixth Circuit decision provided “an incentive for employers to remain willfully ignorant of the time their employees have worked, inviting them to establish company policies designed to allow them to escape liability for time their employees actually worked, regardless of their knowledge of that time.” Citing Anderson v. Mount Clemens Pottery Co., the plaintiff also argued that when an employer fails to keep accurate time records an employee cannot be denied FLSA recovery based on an inability to “prove the precise extent of uncompensated work.” This argument, of course, ignored the fact that the absence of an accurate record was caused by the plaintiff’s failure to follow the established procedure for reporting missed or interrupted meal breaks.

Opposing review by the Supreme Court, the hospital asserted that the Sixth Circuit applied “established legal standards concerning an employer's actual or constructive knowledge of unpaid work performed.” In fact, the hospital pointed out, the Sixth Circuit “expressly analyzed” whether it knew the plaintiff allegedly worked during unpaid meal breaks despite her failure to report that time, and found the hospital lacked such knowledge. Although there was some testimony by the plaintiff that she told her supervisors she was missing some of her meal breaks, the Sixth Circuit found that evidence was not enough to avoid summary judgment where the hospital had an established procedure for reporting missed or interrupted meal breaks and the plaintiff did not report she was not being paid for the missed time. The Sixth Circuit focused on the lack of any evidence the hospital actually or constructively knew the plaintiff was both (1) missing meal breaks and (2) not being paid for them, coupled with evidence there was a reasonable reporting process the plaintiff had successfully used in the past.

The hospital further argued the petition for certiorari was an effort to take the Sixth Circuit’s holding completely out of context. The plaintiff focused her petition on one isolated statement in the Sixth Circuit’s opinion: “Under the FLSA, if an employer establishes a reasonable process for an employee to report uncompensated work time the employer is not liable for non-payment if the employee fails to follow the established process.” The hospital argued this statement must be viewed in the context of the court’s overall analysis of the hospital’s lack of actual or constructive knowledge that the plaintiff allegedly worked without pay during meal breaks. The court considered the plaintiff’s failure to follow reporting procedures as part of its broader inquiry into the hospital’s actual or constructive knowledge.

Further, the hospital pointed out, the Mount Clemens Pottery decision applies only to a plaintiff's ability to prove damages and is not applicable in establishing an underlying FLSA violation. More importantly, the hospital argued, the plaintiff should not be permitted to fail to follow the established procedure for reporting time worked and then turn around and profit from her own inaction.

While neither the Sixth Circuit opinion nor the Supreme Court’s denial of certiorari can be characterized as recognizing an affirmative defense in the technical sense, this decision does highlight how a proactive employer can position itself to better defend FLSA claims brought by employees who have not followed established procedures for reporting time worked. Some steps employers should consider are: (1) clear communication of a policy to report and pay for time worked outside of normal hours; (2) education about the policy; (3) a functional and effective mechanism for reporting time worked; (4) a procedure for handling complaints, errors or omissions related to time reporting and pay; and (5) periodic review to ensure that the time reporting system is functioning as intended and that the polices are being followed and enforced.

*Littler attorneys Paul Prather, Lisa Lichterman Leach, and Alex Boals represented Baptist Memorial Health Care Corporation in this case from its inception as an FLSA collective action through its successful opposition to Supreme Court review.

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