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Eleventh Circuit Scraps Employer’s Defense in FLSA Claim for Overtime Wages

Eleventh Circuit Scraps Employer’s Defense in FLSA Claim for Overtime Wages

May an employee recover under the Fair Labor Standards Act for unpaid overtime even if it was his own fault that the overtime was unpaid? The Eleventh Circuit recently answered “Yes,” in the case of Bailey v. Titlemax of Ga., Inc., 776 F.3d 797 (11th Cir. Ga. 2015).

Mr. Bailey worked at Titlemax for approximately one year. During his employment with Titlemax, Mr. Bailey worked overtime hours for which he was not paid. Mr. Bailey was not paid because his time records were inaccurate for two reasons. First, Mr. Bailey underreported his own hours by knowingly working off the clock and violating other time reporting policies. Second, Mr. Bailey’s supervisor changed his time records to reduce the number of hours reported.

After Mr. Bailey resigned from Titlemax, he brought claims against Titlemax under the Fair Labor Standards Act (“FLSA”) for failing to pay overtime hours. Mr. Bailey was required to meet two elements for his claim to succeed. First, Mr. Bailey had to prove that he worked unpaid overtime. Second, Mr. Bailey had to prove that Titlemax knew or should have known of the overtime work. Mr. Bailey proved both elements in the District Court. However, Titlemax introduced the theory that despite the fact that Mr. Bailey proved his required elements, Titlemax was still entitled to judgment because Mr. Bailey was, in part, responsible for the FLSA violation by underreporting his own time and violating Titlemax time recording policies. The District Court granted summary judgment in favor of Titlemax based on that defense and Mr. Bailey appealed to the Eleventh Circuit.

On appeal, the Eleventh Circuit reversed the summary judgment in favor of Titlemax. According to the Eleventh Circuit, the goal of the FLSA is to counteract inequality of bargaining power between employees and employers. The Eleventh Circuit determined that Titlemax’s defense would contradict the goal of the FLSA because employers could absolve themselves of liability by coercing employees to underreport their time and then use that misconduct to avoid liability. “Barring FLSA actions for wage and overtime violations where the employer is aware that an employee is underreporting hours would undermine the [FLSA’s] deterrent purpose.” Id. at 804. In a nutshell, the Eleventh Circuit found that once knowledge is attributed to the employer, the employee’s conduct becomes immaterial.

In conclusion, when an employer knew or should have known of an employee’s misconduct related to underreporting time, the employer cannot later rely on the employee’s misconduct as a defense to a FLSA claim for unpaid overtime wages.

Matthew A. Barley

Claims for Spoliation of Evidence