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May 29, 2014

WAGE AND HOUR

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Jong v. Kaiser Foundation Health Plan, Inc., 2014 WL 2094270

First District Court of Appeal affirms summary judgment in favor of Kaiser in an off-the-clock wage-and-hour case, finding that its employee failed to raise a triable issue of fact that Kaiser had actual or constructive knowledge that its employee was working off-the-clock overtime.

Henry Jong and two other former Outpatient Pharmacy Managers (“OPM”) for Kaiser filed a putative wage-and-hour class action, alleging failure to pay overtime wages for off-the-clock work.  Kaiser moved for summary judgment as to Jong’s claim and prevailed on the grounds that Jong failed to present evidence that Kaiser had actual or constructive knowledge of his alleged off-the-clock overtime work activity.  Jong appealed.

Much of the evidence Jong offered in support of his claim had been developed in a prior class action in which Kaiser’s OPMs alleged that they had been misclassified as non-exempt employees (and were thus unentitled to overtime).  The depositions of several OPMs were taken during that case and testimony was elicited that the OPMs were routinely required to work 50 hours a week without overtime pay.  As part of the settlement of the prior class action, Kaiser reclassified its OPMs, including Jong, as non-exempt employees.

In support of its motion for summary judgment as to Jong’s subsequent off-the-clock claims, Kaiser submitted excerpts from Jong’s deposition that: (1) Jong was aware of Kaiser’s policy to pay for all hours worked and to pay for all overtime employees recorded, even if the overtime was not authorized; (2) Jong was familiar with Kaiser’s time keeping rules and knew how to use the timekeeping software; (3) Jong had signed a document acknowledging that off-the-clock work was prohibited; (4) Jong did not know if any of Kaiser’s managers were aware, at the time, that he was performing off-the-clock work; and, (5) Jong did not record and could not recall the number of hours he worked off-the-clock.

Jong opposed summary judgment, submitting the deposition testimony of the OPMs in the prior reclassification class action as evidence that Kaiser was generally aware that its OPMs had to and did work more than 40 hours per week to complete their duties.  Jong also submitted evidence of his alarm-code activities along with his work schedules to show various instances when he had deactivated or activated the pharmacy’s alarm either before or after his scheduled shift.  Jong argued this was evidence of his off the clock work and that it was, at all times, information known by Kaiser.

The trial court concluded that Jong’s evidence was insufficient to raise a triable issue of fact that Kaiser knew or should have known that he was working off the clock on the occasions he alleged.  The Court of Appeal agreed.

The Court of Appeal started its analysis with the proposition that, “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for overtime hours is not a violation of [the Labor Code].”

Addressing Jong’s evidence, the Court concluded it failed to establish Kaiser had actual or constructive knowledge that he was working off-the-clock.  Noting that the deposition testimony of the other OPMs was hearsay, the Court ruled that, even if admissible, the evidence only established that Kaiser may have been aware that some of its OPMs were working of the clock.  The testimony did not establish Kaiser’s knowledge that Jong himself was working off-the-clock.

The Court also disagreed that evidence of Jong’s alarm-code activity raised a triable issue of fact.  While the activity established that he sometimes arrived at or left the pharmacy before or after his scheduled shift, Jong did not submit evidence that he had been asked or permitted to work off-the-clock during that time.  And while Jong’s summary judgment papers contained evidence that he was working whenever the alarm was deactivated, he failed to establish that this information regarding his alleged off-the-clock work activity was known to Kaiser when it paid Jong or that Kaiser could have reasonably believed that Jong did anything other than start and finish his shifts except as he reported.

Although the Jong case breaks no new legal ground, it illustrates the importance of having proper, well-documented overtime rules and policies in place.  Kaiser’s success in this case came from its diligence in ensuring the existence of clear policies and that its employees complied with those rules and policies.  If you have questions about your business’s overtime rules or policies, please don’t hesitate to contact our employment counseling team.

 

Practice Area: Employment
Attorney: Douglas J. Melton, Shane M. Cahill

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