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Even If Overtime Isn't Reported, an Employer Can Still Be Liable

December 21, 1999
Related Topics: Wages and Hours, Featured Article
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Issue: Your company has a project with one of your biggest customers and needs to keep all expenses within budget. However, the company also needs to complete the project by the date originally promised or it will lose a big bonus. The project leader instructs one of your most experienced project managers, who is not an exempt employee, to "do what it takes" to finish on time, but not to run up any overtime since you can’t go over budget. Several months later, the project manager threatens to quit unless she is paid for the overtime it took to complete the project. Your project leader responds that there are no company records that she worked overtime. Are you off the hook for overtime?

Answer: No. An employer violates the Fair Labor Standards Act’s overtime provisions if the employer purposely avoids knowledge of its employees’ overtime work. A U.S. District Court in Illinois ruled that an employer was required to pay overtime where the evidence showed that the employer knew the employee worked overtime, despite the employer’s assertion of a lack of personal knowledge. Under the Fair Labor Standards Act, employees entitled to overtime pay must be compensated for overtime worked, even if the employer did not direct that the work be done, if the employer knew or should have known that the work was being done.

In this case, the former employee was awarded several thousand dollars for overtime accumulated over three years, plus attorney’s fees.

Cite: Cunningham vs. Gibson Electric Co., Inc., ND Ill., 43 F. Supp.2d 965 (1999).

Source: CCH Incorporated is a leading provider of information and software for human resources, legal, accounting, health-care and small-business professionals. CCH offers human resource management, payroll, employment, benefits, and worker-safety products and publications in print, CD, online and via the Internet. For more information and other updates on the latest HR news, check our Web site at http://hr.cch.com.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

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