Goodthingsshot-edit.jpgRemember those Guinness commercials from the early 2000s with the tagline “Good things come to those who wait” (or maybe, if you predate the no-mess squeeze bottles, you remember the Heinz ketchup commercials with the same tagline from the 1980s)? In wage and hour law, good things come to those who document good wage and hour practices.

We have written in the past about the myth of unauthorized overtime. A recent California appellate case, Jong v. Kaiser Foundation Health Plan, shows how you can make unauthorized overtime’s impact on your business a myth, too. Under the FLSA, employees are entitled to pay for any time that they are “suffered or permitted” to work. The Jong case focuses on the exceedingly common fact pattern where a non-exempt employee (here an “Outpatient Pharmacy Manager” or “OPM”) claims that an employer’s “lofty expectations” forced him to work additional hours off the clock. Jong claimed that Kaiser held OPMs accountable for meeting certain budgets, and that he had been disciplined in part because overtime he reported caused him to exceed his targets. Sounds pretty typical so far, right?

The California court refused to hold Kaiser liable for the alleged overtime because Jong could not show that Kaiser had any knowledge (actual or constructive) that Jong actually worked overtime. How is that possible? According to Jong’s own testimony, Kaiser had a clear policy to pay employees for all hours worked, including overtime, and was not contingent on obtaining prior approval. Kaiser’s policies also required OPMs to use its tracking system to account for all hours worked. Worse for Jong, he had to admit that Kaiser had told him he was eligible to work overtime hours, that it had never denied his request to work overtime, that he had always been paid for all of the hours worked he reported, and that no one from Kaiser had ever told him to work off the clock. Indeed, evidence in the record showed that, in response to concerns that pharmacy employees were working off the clock, Kaiser had e-mailed its area pharmacy directors instructing them to tell staff “that working off the clock is unacceptable” and directing them to require OPMs to sign an attestation that “working off the clock is a violation of policy and may subject them to discipline.”

The appellate court concluded that Jong had failed to provide evidence that Kaiser was aware he had allegedly worked off the clock, and his claims were dismissed. Kaiser didn’t get off scot-free, though. The court refused to dismiss claims by two other OPMs who had demonstrated evidence that their area pharmacy directors were aware of their alleged off the clock work.

Kaiser’s success—and its failures—demonstrate why documenting policies and actually following them consistently are critical. So how can you survive “unauthorized overtime” claims? First, have a clear policy stating that you will pay employees for all hours worked and that working unauthorized overtime could subject them to discipline. It is perfectly legal to require employees to obtain authorization before working overtime hours, and to counsel or discipline employees who fail to follow this policy. Then, follow through by reminding employees of your policies. If overtime requires advance approval, make sure the employees understand this and are put on notice of the disciplinary consequences of working unauthorized overtime without such approval may result in discipline (and, yes, it is okay to be diplomatic and understanding on first offenses—not everything that happens to your employees is an opportunity to discipline them). Most importantly, make sure that employees record all of their time and that you properly pay them for all of it, whether authorized or not.

Kaiser’s partial victory shows how a commitment to establishing, communicating, and consistently enforcing off the clock and overtime policies can pay off for employers. The unauthorized overtime claims you DON’T get as a result will save you enough to enjoy a few extra pints of Guinness and some extra ketchup with your burger.