New York Employment Lawyer Blog

Overtime pay scams are common but the Courts do catch on.   Recently the Second Circuit Court of Appeals acknowledged that time sheet fraud does occur.

Overtime Pay Time Sheet Fraud

Time sheet fraud occurs whenever a company intentionally excludes overtime hours from their time sheets.

One popular technique is to create a Catch-22 situation for employees.    Companies do this by creating two conflicting time sheet policies.   First the company issues a written policy that requires accurate time sheets.  Something like "all hours, including overtime hours, must be recorded on time sheets." This way it looks like the company is trying to keep accurate records.   However, in practice the company follows a different policy.   Employees are told verbally by their supervisors not to record any overtime hours on their time sheets.   So the employees do not record their overtime hours.

When an employees later claims that they were not paid overtime, the company then blames the employee for not keeping accurate records and accuses the employee of making up bogus overtime hours.   The company produces its written policy as proof of its time keeping practices and the employee has no record of their overtime hours.   It can make it tough for employees to recover their overtime pay.

But the Second Circuit Court of Appeals recently recognized this trick in Kuebel v. Black & Decker, decided on May 5, 2011.  Here is what the court said:

"At least where the employee’s falsifications were carried out at the instruction of the employer or the employer’s agents, the employer cannot be exonerated by the fact that the employee physically entered the erroneous hours into the timesheets. As the district court emphasized, Kuebel admits that it was he who falsified his timesheets, notwithstanding [the Companies] official policy requiring accurate recordkeeping. But his testimony — which must be credited at the summary judgement stage — was that he did so because his managers instructed him not to record more than forty hours per week. He specifically testified that at company meetings and during discussions with one of his supervisors, it was conveyed to him that he was not to record overtime no matter how many hours he actually worked. In other words, Kuebel has testified that it was B&D, through its managers, that caused the inaccuracies in his timesheets."

It is good to see that Court's recognize this.   The Second Circuit Court of Appeals is usually very good.   Many courts, however, seem to live in a fantasy world where they believe that companies actually follow their own written policies.  The reality is that company policies are often written by lawyers or human resource drones and these policies are not actually followed on the factory floors.

The Wait A Second blog first reported the Kuebel decision in this post.