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Employee who didn’t seek authorization or report hours can’t get overtime

By Kathleen Kapusta, J.D.

A manager trainee for All American Check Cashing who neither sought authorization to work overtime nor reported the alleged overtime hours through the company’s timekeeping system failed to convince the Fifth Circuit to revive her FLSA claim for unpaid overtime. As to her claim that the company violated Title VII as amended by the Pregnancy Discrimination Act by firing her because she was pregnant, the appeals court found that because the only circumstantial evidence was temporal proximity, All American was entitled to judgment as a matter of law after it established legitimate, nondiscriminatory reasons for her termination. The district court’s judgment in favor of the employer was affirmed at to both claims (Fairchild v. All American Check Cashing, Inc., January 27, 2016, Prado, E.).

As a manager trainee, the hourly employee was responsible for cashing checks, issuing loans, and making reminder and “past due” phone calls to assist with debt collection. She was promoted to manager, a salaried position, for several months but as a result of numerous complaints about her performance, she was demoted back to the manager trainee position where she continued to receive performance-related warnings from her manager.

Termination. Two months after the employee informed her manager that she was pregnant, and two days after an acting supervisor took over the store, the employee was terminated. Alleging that All American terminated her because of her pregnancy in violation of Title VII and failed to pay her overtime wages in violation of the FLSA, she sued. Before trial, the parties agreed that the FLSA claim would be decided by the judge and the Title VII claim would be decided by a jury. After the close of the employee’s case in chief, the district court granted All American’s motion for judgment in its favor on both claims.

Overtime claim. On appeal, the employee argued that All American failed to pay her overtime for the two periods in which she worked as a manager trainee. Although she was paid for the overtime hours she reported through the company’s timekeeping system, she sought payment for the alleged overtime hours that she worked but did not report.

With regard to the first period, the appeals court found that the employee ignored her employer’s policy and procedures in that she neither sought authorization to work overtime nor reported the alleged hours through All American’s timekeeping system. Observing that she testified she intentionally failed to report her unauthorized overtime because All American prohibited such overtime, the court reasoned that to “hold that she is entitled to deliberately evade All American’s policy would improperly deny All American’s ‘right to require an employee to adhere to its procedures for claiming overtime.’”

Constructive knowledge? The court found unavailing her contention that her computer usage reports, which allegedly showed she was working after “clocking out,” proved that All American had constructive knowledge she was working overtime. Although the company could have potentially discovered her overtime hours based on those reports, the question was whether All American should have known, said the court, finding that the district court did not clearly err in holding that mere “access” to this information was insufficient for imputing constructive knowledge.

Noting the absence of evidence suggesting that All American required her to work overtime and submitted falsified time records that underreported her hours, the court observed that the employer expressly instructed her not to work overtime other than that for which she was approved. Her subjective belief that All American “permitted [her] to get the job done” did not establish that it implicitly approved or required such overtime.

As to the second period as manager trainee, her only evidence was her uncorroborated testimony that she worked approximately 10 hours of overtime a week for which she was not paid. Accordingly, the district court did not clearly err in holding All American did not have notice, whether actual or constructive, that she was working overtime during this period.

Pregnancy bias. With respect to her pregnancy discrimination claim, the employee argued that the district court erred in holding that statements made by a manager from another store who allegedly told her that her pregnancy was related to her termination were inadmissible hearsay. Rejecting her contention that the statements were admissible under Rule 801(d)(2)(D), which provides that a statement is not hearsay when it is “offered against an opposing party” and “was made by the party’s agent or employee on a matter within the scope of that relationship and while it existed,” the appeals court found that this exception does not apply to an employee’s statement concerning a termination decision when that employee “had nothing to do with” that decision. Such statements do not “concern a matter within the scope of” the employment relationship and instead are “made in [that employee’s] capacity as wiseacre only,” said the court.

Temporal proximity. As to the temporal proximity between her announcement of her pregnancy and her termination (which she argued was two days based on the time lapse between the acting supervisor taking over), the court found that even assuming without deciding that she established her prima facie case, the district court was correct to conclude that she failed to rebut All American’s legitimate, nondiscriminatory reasons for her termination: her contentious relationship with her manager; the problems she caused regarding store morale and customer service; and her repeated performance-related problems that resulted in numerous warnings.

Noting that it has not yet addressed whether the temporal proximity between an employer learning of a plaintiff’s pregnancy and the challenged employment action can be sufficient to prove pretext, the appeals court observed that in the context of other employment discrimination claims, it has held that while suspicious timing may be evidence of pretext under McDonnell Douglas, such “[t]iming standing alone is not sufficient absent other evidence.”

The court also found instructive its reasoning regarding temporal proximity as applied to retaliation claims: to allow the plaintiff to prove pretext based solely on temporal proximity “would unnecessarily tie the hands of employers” after the protected conduct is disclosed. Declining to adopt a different analysis for pregnancy-based sex discrimination claims under Title VII, the court found that although the temporal proximity between the employer learning of the plaintiff’s pregnancy and her termination may support a claim of pretext, such evidence—without more—is insufficient. Because the only circumstantial evidence here was temporal proximity, All American was entitled to judgment as a matter of law after it established legitimate, nondiscriminatory reasons for the employee’s termination.