sixth cicuit.jpgCo-authored by Kristin McGurn and Timothy Nelson

Courts continue to reject automatic meal period deduction cases and offer useful guidance to hospitals that have been plagued by such cases for years. (Camilotes, Megginson, Wolman).  In White v. Baptist Memorial Health Corporation, the Sixth Circuit endorsed the use of policies to automatically deduct time for unpaid meal periods, finding that such policies do not, standing alone, violate the FLSA.  The Sixth Circuit said in White that “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.”  White affirmed the trial court’s decision granting Baptist summary judgment on White’s FLSA claim, finding that White presented no evidence that Baptist knew or should have known that she was working through meal breaks without compensation.  Without a viable claim of her own, the Court affirmed that White could not establish that she was similarly situated to those whom she sought to represent, which resulted in decertification of the conditionally certified FLSA action.   

White, an emergency room nurse, did not have a regularly scheduled meal break due to the emergent nature of her work.  Like many healthcare professionals working in acute care departments, White was expected to take a meal break as work demands allowed.  Baptist’s policy automatically deducted time from shifts of six or more hours for an unpaid meal break.  Baptist’s policy also indicated that if a meal period was missed or interrupted, partially or completely, for work then the employee would be paid.  Baptist instructed employees to record all time spent working during meal breaks in an “exception log.”  Evidence showed that employees were compensated for time recorded in these logs, including White and others on her unit who collectively reported missed or interrupted meal breaks on particular shifts.  White admitted that she also was paid for meal breaks that she individually reported as missed.

White acknowledged in writing that she understood the hospital’s meal break policy and that she was to use the exception log to be compensated for missed or interrupted meal periods.  White claimed, however, that her meal breaks were interrupted from time to time and she was not compensated.  She also claimed that she told her supervisors and Baptist’s HR department on occasion that she was unable to take meal breaks, but she never told them that these breaks went uncompensated.  White admitted that she understood Baptist’s procedure for reporting payroll errors and that when she used it the errors were “handled immediately.”  Nevertheless, White testified that eventually she stopped logging missed meal breaks despite Baptist instructions and did not use the hospital’s procedures to correct payroll errors because she felt it would be “an uphill battle.”  Importantly, there was no evidence that Baptist prevented or discouraged White from using any of these procedures.   White could not remember, and had no records of, the interrupted breaks for which she claimed not to be paid.

The Sixth Circuit reiterated that automatic meal break deductions are lawful under the FLSA, but reminded employers that if they know or have reason to believe that employees are continuing to work during breaks then the time may be compensable.  The Court focused on whether Baptist had actual or constructive knowledge that White worked without pay during meal periods.  Citing heavily to Fifth, Eighth and Ninth Circuit overtime cases discussing constructive knowledge, the Court found that there was no way Baptist should have known that White was not paid for compensable work during meal periods because she decided not to comply with Baptist’s procedures, and there was no evidence that she complained about being paid improperly. 

This decision is helpful for employers who use automatic meal period deduction policies for several reasons.  First, the Sixth Circuit stated that “when the employee fails to follow reasonable time reporting procedures, she prevents the employer from knowing its obligation to compensate the employee and thwarts the employer’s ability to comply with the FLSA.”  Employers who choose such policies must establish and clearly communicate processes by which employees are accountable to record uncompensated work time, ensure that employees understand and acknowledge their role in these processes, and monitor and respond appropriately when the processes are used to record time “by exception.”  Second, White establishes that the standard for constructive knowledge of uncompensated work time is whether the employer should have known, not whether it could have known.  This standard will undermine employees’ arguments that the employer is obligated to sift through peripheral records to determine if employees were in fact performing work off-the-clock, and illustrates that placing some burden on employees to bring such work to the attention of the employer is appropriate. 

The lengthy White dissent, which challenged the majority’s focus on constructive rather than actual knowledge, cited White’s testimony that she occasionally reported a missed or interrupted break in the exception log for which Baptist did not pay her.  The dissenting judge found this evidence sufficient to create a triable issue of material fact – whether Baptist had actual knowledge of White’s uncompensated work – that rendered summary judgment inappropriate.  We can expect employees to use the logic of the dissent as a roadmap and continue to attempt to defeat summary judgment by pointing to even the slightest evidence that they complained of, or their employer should have known of, unpaid work performed off-the-clock, even if the employee failed to report all of it by exception. 

The White decision follows the same Court’s prior Frye decision that decertified another FLSA collective action against Baptist, furthering its message that automatic meal period deduction cases, depending as they do on employer knowledge, are difficult to maintain on a class-wide or collective basis.