Is payroll or HR personally liable when employees refuse to report all hours worked?

Question:

Hello, I am the finance manager/payroll processor for a small preschool. We have been hit by the FLSA’s exempt threshold, and I’m running into issues with employees being honest with their timecard. I have several that will clock out and continue to work even though I have reiterated many times they are to be clocked in while working. I am aware that I am legally responsible, but my boss and I are curious to know if there is a reasonable limit.

For example, I will check our security system to see when people are arriving and check to see if they left when they say they have. But I don’t always catch these things or have proof that it happened to adjust their timecard (we do not have cameras in the classroom, let alone knowledge of them working at home unless they admit to it). I know the burden of proof falls on me if there was ever a lawsuit or a DOL investigation. I also doubt the likelihood of this happening, but I’m really worried about this and am considering leaving my job over this personal liability. How vigilant am I expected to be when it comes to employees lying about their hours worked? Thank you.

Answer:

Thank you for the question.  Hopefully this response provides a few things to consider:

First, you are correct in that employers are ultimately responsible for ensuring their employees are properly paid for all compensable time, regardless of whether that time was properly recorded.  However, there are steps your preschool may take to help ensure timekeeping accuracy, such as:

• Implement written timekeeping policies and procedures, including a reasonable processes for employees to report uncompensated working time and to correct payroll errors, and consistently discipline employees for policy violations.
• Train employees and managers on timekeeping policies and procedures, including as part of their onboarding, when policies change, and at regular intervals.
• Post reminders about timekeeping accuracy in employee break rooms and near time clocks. For online timekeeping systems, include reminders as separate acknowledgment screens or popup windows.
• Require managers to certify all time sheets and correction requests.

Second, you may consider implementing a “Hours Worked Certification” or something similar, where each pay period, every nonexempt employee signs or acknowledges a document certifying that the time they’ve recorded completely and accurately reflects all of their working time for that period. That won’t take all the responsibility off you as the employer, but if ever questioned, it should go a long way to support the accuracy of your records or rebut the employee’s version of events.

Third, keep in mind that an employer’s liability for compensable off-the-clock work claims may also depend on whether the employer had actual or constructive knowledge of the work. Of course, an employer must exercise reasonable diligence in properly tracking time worked (which may include implementing the suggestions above).  Reasonable diligence does not require, however, that employers take impractical steps such as comparing time slips with the call and email records from an employee’s cell phone.

Federal courts generally take the view that an employee’s failure to follow work place policies regarding recording all hours worked does not relieve the employer of its obligation to pay for the work.  However, an employee’s failure to record working time can support the employer’s position that it did not have the actual or constructive knowledge that triggers FLSA wage payment obligations.

Finally, please keep in mind that state and/or local laws may impose different requirements than the FLSA, so please consider consulting with knowledgeable local employment counsel.