A Developing "Faragher" Defense to FLSA Claims

One of the most difficult claims confronting employers is a claim under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §201, et. seq. The FLSA imposes (in reality) strict liability on employers – the employee works more than 40 hours/week, the employer knew or should have known, the employer is liable. An employer's best intentions and reasonable efforts to comply generally are no defense – until recently.

In Faragher v City of Boca Raton, 524 U.S. 775 (1998), the Supreme Court held that (generally) an employer could not be held liable for a supervisor's sex harassment of a subordinate where the subordinate failed to take advantage of the employer's properly worded, communicated and implemented anti-sex harassment policy. Drawing from Faragher, an increasing number of courts have dismissed FLSA claims filed by employees who failed to take advantage of policies designed to allow employees to seek compensation for inadvertently unpaid overtime. In other words, an employer's reasonable efforts to insure that its employees are properly compensated, can be a defense.

The most recent case to allow this defense is White v Baptist Memorial Health Care Corp., No. 11-5717 (6th Cir. Nov. 6, 2012). Baptist Memorial's employee handbook included a provision alerting employees to its policy of automatic deductions for meal breaks, but also detailing procedures for employees to request compensation for missed meal breaks through an "exception log" in which employees would record hours worked during their meal breaks. Ms. White had used the exception log on several occasions and had been paid for the time the recorded on the log. Nevertheless, she sued claiming she had not been paid for additional overtime. Dismissing her claim, the 6th Circuit stated 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".

In addition, Courts of Appeals in the 4th Circuit, 5th Circuit, 9th Circuit and 10th Circuit have upheld summary judgment dismissals of FLSA claims based upon this defense. The 11th Circuit (which includes Florida, Georgia, and Alabama) has cited several of these cases with approval, indicating that it would likely approve use of the Faragher defense in the context of an FLSA case.

Given the proliferation of FLSA claims in Florida (more than 25% of all FLSA lawsuits nationwide are filed in S. Florida), and the difficulty and cost of defending against them, employers would be well advised to draft, communicate and implement properly worded policies providing employees easy to use mechanisms to request compensation for unpaid hours of work. These policies will not only help prevent uncompensated hours of work from occurring, but they may also provide a potent defense against any FLSA claims once filed, saving tens of thousands of dollars in defense costs.

For questions regarding FLSA claims defense, please contact Kelly Kolb.