Another FLSA Class-Action Lawsuit Bites the Dust

I’ve written before about the dangers of taking automatic meal break deductions from employee pay. It may seem convenient at first, but problems can arise if employees somehow miss taking an actual lunch break. If you still deduct the time, you may have underpaid that employee, which can leave you open to liability.

doctor and patient

The more employees you have and the more likely it is they’ll miss a lunch, the bigger the risk. It’s become a real hot-button issue for people whose lunches may frequently be interrupted by emergency situations, such as nurses and other healthcare workers.

Quite a few healthcare organizations such as hospitals, clinics and nursing homes have been sued recently by employees claiming the organization took automatic lunch deductions when the workers didn’t receive uninterrupted lunch breaks. In at least some cases, these have turned into (expensive) class-action suits.

A class-action suit isn’t a slam-dunk for the plaintiffs, though.

Creely v. HCR ManorCare, Inc. — Background and Results

For instance, let’s take a look at Creely v. HCR ManorCare, Inc. In this case, a group of 318 nurses, nursing assistants and admissions coordinators (out of a possible 3,239 current and former employees) opted-in to a class-action suit. They claimed their employer’s automatic meal break deduction policy violated the Fair Labor Standards Act (FLSA) because it meant they didn’t get paid for all the time they worked. Their case hinged on several assertions:

  1. The employer illegally shifted the burden of monitoring “compensable work time” on to the employees by requiring them to use its “missed punch” card system to cancel the meal break deduction whenever they worked through lunch.
  2. HCR failed to monitor them to ensure they actually received meal breaks when a deduction was taken.
  3. The company didn’t train or inform them clearly of what to do when they did miss a meal break.
  4. And finally, they were discouraged from filing “missed punch” reports when they worked through lunch.

In an outcome designed to warm an employer’s heart, after examining the evidence the court ultimately threw out the case and de-certified the class. This doesn’t mean individual employees can’t come back and claim the same issues in their own lawsuits. However, it does mean the employer won’t face the potential of a huge class-action settlement or judgement in this case.

So, What Was The Reasoning?

It could be useful to review how the court reached this decision and see if anything there could be applied to your business.

It turns out, HCR had done a number of things right:

  • Their corporate policies were consistent on the subject of missed meals and what to do about them.
  • Their employee handbook, which was distributed to everyone who worked at HCR, had a section requiring employees to inform their supervisor if they missed a meal break.
  • At least some employees were required to sign a “Letter of Understanding,” which (among other things) included an acknowledgement of the automatic meal break deduction and reiterated the instruction to contact their supervisor if they missed their meal break.

Combining this consistent corporate policy with the fact that the employees in the purported “class” worked at different facilities in locations all over the country, in different departments, reporting to different supervisors, and the judge decided they didn’t have enough in common to constitute a class after all.

How Can This Help Us?

There are a few take-aways from this case that can be applied to all businesses, whether they take automatic meal break deductions or not, and no matter how many locations they may have:

  • Make sure your policies and procedures are consistent across all workgroups, departments and locations, and that they conform to the law. This makes it hard to argue your policies encourage illegal activities or discourage employees from exercising their rights under the law.
  • Educate your employees. Have them sign documents indicating they have received and read their employee handbook. It may pay to highlight particularly important points in a separate summary document, such as HCR’s “Letter of Understanding” and have employees review and sign that when first starting work with the company. This makes it harder for employees to argue they didn’t know what your policies are, or how to follow them.
  • Educate your supervisors. It’s hugely important they understand and follow your company policies and procedures — and make sure the people reporting to them do the same. When the violate your policies, they open themselves and the company as a whole up to potential risk. While the class-action suit is history, HCR may face individual lawsuits. They can still end up having to pay back wages if it turns out that some of their supervisors actually did discourage their employees from reporting missed meal breaks.

The bottom line: consistent company policies that comply with the law, together with supervisor and employee education, can be one of your strongest defenses against wage and hour violations, lawsuits and penalties.

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