Automatic Clock-Out Spells Potential California Overtime Lawsuit

Sacramento, CAEmployers who have in place automatic clock-out to monitor when employees begin and finish their shift and take meal breaks could be facing a California overtime lawsuit. Attorney Ben Stewart says that “auto clock-out” is prevalent in lots of businesses and the system is increasingly abused, to the detriment of workers.

“If you have to clock in and out with an auto-clock, you must get previous permission, say from your store manager, to continue working,” says Stewart.

That’s the crunch. Employers tell their workers that they need permission first to work overtime before they work off-the-clock. Easier said than done. “I’ve seen this situation firsthand at my local CVS pharmacy store,” adds Stewart. “When the assistant manager’s shift ended at 6 pm (and who is also misclassified), I heard him tell the manager that his shift was over because he had automatically clocked out. ‘Sorry, you have to keep working,’ she told him. I asked the kid, who looks about 19 years old, if he is getting overtime. ‘I can't leave the customer,’ he told me.”

Stewart adds that assistant managers are the typical targets of overtime violations and other California labor law violations. “For instance, if you are an assistant manager, you will automatically get clocked out after your 8-hour shift at 6 pm so it is your responsibility to finish work at 6 pm. But assistant managers cannot leave customers sitting there - unless they want to be fired.”

And the same goes for lunch breaks. The best practice is to require employees to clock out and back in for meal breaks, but the automatic clock takes 30 minutes off your shift regardless whether or not you take time off. You can work through lunch and still get clocked out.

Employers nationwide must keep in mind that the FLSA (Wages and Fair Labor Standards Act) requires them to compensate employees for all work “suffered or permitted,” and that includes work the employer does not know about or authorizes beforehand. For instance, the University of Maryland Medical System Corporation used an automatic time clock for its hospital employees who were deducted 30 minutes for scheduled meal breaks. The employees filed an overtime lawsuit against the hospital claiming that they had no way (either through their electronic time clock or manually) to adjust this deduction if they worked during their meal break. The court denied the hospital’s motion to dismiss, explaining that if an employer adopts an automatic deduction policy that shifts the burden to an employee to report deviations in standard meal breaks, the employer must clearly articulate its policy to employees and “make every effort to facilitate reporting opportunities.”

Further, the court determined that employers “cannot simply abdicate responsibility for adequate compensation by shifting the burden to employees.” To minimize wage and hour liability, an employer must “exercise its control and see that the work is not performed if it does not want it to be performed.” (The lawsuit is Quickley v. University of Maryland Medical System Corporation.)

Perhaps the only way that auto-clocks work without incurring overtime is for employers to implement ways for their employees to override or adjust an automatic deduction if they work during some or all of their meal breaks, or work longer than their 8-hour day.