If an employee underreports his time—and his employer knows about it—can the employer use that conduct to get around liability for unpaid overtime under the FLSA?

What if an employee does not keep accurate time records in violation of company policy? Is an employer able to shift the blame onto the employee for any resulting unpaid overtime? In a recent decision from the Eleventh Circuit Court of Appeals, the court found that if the employer knows that the employee is underreporting his time in this way, it cannot rely upon his failure to comply with company policy regarding time records as a defense to a FLSA claim. Bailey v. TitleMax of Georgia, Inc., No. 14-11747 (11th Cir. January 15, 2015).

In Bailey, the employee was told that that TitleMax did not allow overtime and there would be times he would work off the clock. The employee thus worked off the clock and submitted inaccurate time records. Additionally, in this case, the supervisor actually edited the employee’s time records on certain occasions. TitleMax argued that employee violated its policy requiring the accurate reporting of hours. TitleMax further argued that by not complaining about his supervisor changing his time, he violated a policy instructing employees who had a problem at work to notify the management. The district court agreed with these arguments and granted summary judgment to the employee. But the Eleventh Circuit disagreed, explaining the goal of the FLSA is to “counteract the inequality of bargaining power between employees and employers.” To permit an employer to escape FLSA liability when it knew or had reason to know that its employee was underreporting his hours, would “allow an employer to wield its superior bargaining power to pressure or even compel its employees to underreport their work hours, thus neutering the FLSA’s purposeful reallocation of that power.” Bailey, p. 6.

The takeaway from this case—if you know your employee is working off the clock, the fact that you have a policy in place prohibiting this type of work is not enough to protect you from liability under the FLSA.