Lessons Learned from Fight over Off-the-Clock Work

The story of a Chicago woman fired from her job after she was caught working on her lunch break made national news earlier this year. It struck a chord with the general public because people were questioning why an employer would fire an employee for seemingly going the extra mile. If an employee is punished for giving a little extra on the job, what’s the world coming to?

Of course, HR professionals understand that although federal wage and hour law doesn’t require employers to provide a lunch break, some states have laws requiring that nonexempt employees be given a duty-free meal break, and company policies are written to conform to the law. Employers breaking the law by demanding — or even allowing — employees to work off the clock face severe consequences.

The issue of nonexempt employees working off the clock may not be news to HR professionals. But since the case of Chicago receptionist Sharon Smiley hit the media, employers are questioning how such situations should be handled.

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Lunch break trouble
To recap the case, Smiley was a 10-year employee at a Chicago real estate company. She clocked out for lunch on January 28, 2010, and then proceeded back to her desk to work through lunch, according to media reports. A manager saw her and told her that she needed to leave her desk and take her lunch break.

Smiley refused to stop working, and the company’s HR director then explained that hourly, nonexempt employees were required by company policy to take a 30-minute lunch break. That policy put the company in compliance with Illinois law.

The dispute over the lunch break led to Smiley being fired, an event that started a two-year fight covering more than the off-the-clock work issue. It also brought up the question of whether she should receive unemployment compensation. Depending on state law, fired employees sometimes qualify for unemployment. And it’s not always clear-cut when an employer should object to an employee’s application for unemployment.

Unemployment after firing?
The reason for Smiley’s termination was insubordination, not working through lunch, and that reason for the firing was important because she didn’t go to court claiming the firing was unjust and she should get her job back. She sued to get unemployment compensation.

When Smiley applied for unemployment benefits, she was informed that she had been discharged for misconduct and was therefore ineligible for benefits. She appealed to the Illinois Department of Employment Security but was turned down during three trips through the department’s review board.

It was then that Smiley went to court, which ruled on November 17, 2010, that she should have gotten unemployment. That decision was appealed, and the appellate court upheld the lower court ruling this January.

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What to do?
So how can employers avoid such protracted and messy disputes? Steven L. Brenneman, a partner with Ford & Harrison LLP in Chicago, says an employer’s response to an employee who works through lunch should be: “Pay the employee for all time worked; but impose the company’s normal discipline for violating the rules.” That includes rules requiring nonexempt employees to break for lunch.

That’s sound advice in any state, but employers must be aware of laws that affect how they write their workplace policies. The federal Fair Labor Standards Act (FLSA) doesn’t require meal or rest breaks, but it does say that rest breaks less than 20 minutes long must be counted as work time. Also any nonexempt employee on an unpaid break must be relieved of all duties.

Many states have laws that do require breaks for nonexempt employees. In Illinois, most nonexempt employees who work at least seven-and-one-half continuous hours must be provided an unpaid meal period of at least 20 minutes. So employees working through a break required by state law should be paid for their time worked, but they can be disciplined for violating a work rule.

Staying off the hook
Employer liability for off-the-clock work is increasingly becoming a serious issue for employers, according to Kara E. Shea, a member at Miller & Martin PLLC in Nashville, Tennessee. She wrote on the issue in the September 2011 issue of Tennessee Employment Law Letter.

“Once you’re on the hook in an off-the-clock case, it’s hard to get off,” Shea writes. “The law places higher burdens on the employer than on the employee in this kind of case.” She explains that an employee’s testimony that the employer’s time records are incorrect usually will prevent the case from being dismissed.

Shea emphasizes that an employer’s policies on timekeeping are crucial. “One of the best ways to avoid off-the-clock issues is to make sure your employees understand your timekeeping procedures, including how to report inaccuracies in time records or pay, how break times work (e.g., how to report missed breaks), and (especially for employees who work from home or off-site) what time constitutes compensable work time. Be certain employees understand they are never to perform any work off the clock,” Shea writes.

Supervisor training also is crucial. “Make sure your supervisors understand your policies and the basics of wage and hour law,” Shea writes. “Take swift remedial action against supervisors who require or allow off-the-clock work.”

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