Employment Law Alert: Conjecture is Insufficient to Establish Actual or Constructive Notice of Off-The-Clock Work

In Jong v. Kaiser Foundation Health Plan, Inc., WL 2094270, published May 22, 2014, Plaintiff, Jong, a former pharmacy manager, and two other managers brought a putative class action against their employer, Kaiser Foundation Health Plan, Inc. (“Kaiser”), for unpaid overtime for alleged “off-the-clock” work. The trial court granted Kaiser’s Motion for Summary Judgment as to Jong, finding that Jong failed to proffer sufficient evidence that Kaiser had actual or constructive notice that he was working off-the-clock. Jong appealed and in a favorable case for the defense, the Court of Appeal confirmed the trial court’s ruling.

Between January 2005 and October 2010, Jong worked as an outpatient pharmacy manager at three different Kaiser pharmacies. Prior to November 2009, Jong and all outpatient pharmacy managers were classified as salaried employees, exempt from various wage and hour requirements. As a consequence of the settlement of a class action wherein these employees alleged they had been misclassified and denied benefits to which they were entitled (Lopez v. Kaiser Foundation Health Plan, Inc. (Super. Ct. Alameda County, No. RG 07–305405)), these employees were reclassified as non-exempt hourly employees entitled to overtime premium compensation.

Jong alleged that at the same time, Kaiser instituted a policy that forbade the payment of overtime premium, while simultaneously refusing to make any adjustments to the duties and responsibilities of the Class. He further claimed that before they were re-classified, class members were routinely working fifty (50) hours or more per week in order to meet Kaiser’s goals and requirements. Jong alleged he was forced to work off the clock so as not to incur overtime premium pay in violation of Kaiser’s policy while still maintaining compliance with Kaiser’s expectations.

Kaiser moved for summary judgment on the ground that Jong lacked evidence that Kaiser failed to pay overtime wages for hours he worked that Kaiser knew or should have known he worked. In granting the motion, the trial court ruled that Jong failed to show that he – as distinguished from some pharmacy managers in general – was working off the clock.

Jong’s cause of action was brought under Labor Code section 1194, which authorizes “any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee” to recover the unpaid amount due, plus interest, attorney fees and costs. In order to prevail, Jong must establish that Kaiser had actual or at least constructive knowledge that he was working more than the hours he reported. Jong principally relied on deposition testimony that 18 managers gave in the Lopez litigation.

Each of the 18 managers testified that they needed more than 40 hours a week to perform their required tasks. The appellate court found this evidence insufficient to prove notice. The issue as to each plaintiff is whether Kaiser had constructive knowledge of whether that plaintiff was working off the clock and the notice issue is specific to that individual in his or her specific pharmacy rather than managers in general. The appellate court further held that an email from Kaiser to all area managers that there have been reports of potential violations of the prohibition of working off the clock fell short of evidence that Kaiser knew Jong was working off the clock at his pharmacy. The appellate court confirmed that none of the evidence, considered independently or collectively, was sufficient to support a finding that Kaiser was aware of Jong’s unreported overtime hours.

This case illustrates that a plaintiff must set forth specific facts – as opposed to mere conjecture – to show a defendant had actual or constructive notice of a violation of the Labor Code.

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May 28, 2014