In McGrath v. Central Masonry Corp., a masonry foreman alleged he was not compensated for overtime hours under the FLSA, even though he failed to report the hours on his time sheets.  A federal district court in Colorado upheld a jury’s finding that the violations were “willful,” and imposed liquidated damages against the employer, doubling the plaintiff’s recovery.

In upholding the jury verdict, the court pointed to several facts in the record.  First, since the company’s owner had once berated the plaintiff for reporting overtime hours, “the jury could reasonably conclude that Plaintiff failed to report all of his future overtime hours out of fear of reprisal.”  Second, the jury could infer from evidence that the plaintiff complained about having to attend safety meetings and pick up his paychecks that his complaints related to not being compensated for such peripheral tasks.  Third, “the jury could reasonably infer from Defendant’s imposition of the unwritten flex time policy that Defendant knew about overtime being performed by the foreman, and sought to reduce expenses with the flex time policy.”  The court also rejected the good faith defense asserted by the employer, as it had consulted no experts about the legality of its policies and conduct.

The court characterized the flex policy as “fly-by-night” policy and a “homegrown concoction, created . . . with little or no concern as to whether it complied with the letter of the law,” asking, “Why would Defendant have instituted the flex time policy if it did not know about problems with overtime and overtime compensation?”  While the court clearly believed that this company’s policy was inadequate, so long as employees are instructed to report all hours accurately, flex-time policies designed to curtail employees from working overtime are not generally prohibited by the FLSA. For example, if an employee working a typical forty-hour schedule worked ten hours on Thursday, he could legally be scheduled for only six hours on Friday in order to avoid overtime.

McGrath reminds employers instituting flex policies to communicate the policy clearly and to take complaints seriously. Perhaps the employer could have escaped a liquidated damages award had it responded to the plaintiff’s complaints about peripheral activities by reviewing its flex policy and clearly instructing him to report all hours worked.