Employers may need to implement new payroll procedures due to a recent 8th U.S. Circuit Court of Appeals ruling on overtime.
In a Nebraska lawsuit against Famous Dave’s restaurant chain, the appeal court upheld the lower court ruling that the employer should have known that employees were working a more than one Famous Dave’s location.
The restaurant chain is based in Minnesota and has both franchise and company-owened locations throughout the Midwest.
The court found that most Omaha restaurants had policies prohibiting employees from working at more than one location. When an employee had permission to work at several locations, the employer had a system in place to combine the employees hours to calculate overtime.
However, Famous Dave’s had no policy prohibiting employees from working at more than one location. A number of employees did work at two or more locations. Their hours were not combined to calculate overtime, which is a violation of the federal Fair Labor Standards Act. For example, an employee who worked 30 hours at one location and 20 hours at another location should have been paid 10 hour of overtime. Instead, the employee was paid straight time for all 50 hours.
The restaurant chain claimed that because each location hires and schedules separately, they were not aware that the employees worked at two Famous Dave’s. Although the restaurant chain has franchises, it appears that all the locations involved were company owned and operated.
However, several of the employees gave Famous Dave’s as their current employer on their job applications.
A third-party payroll service processed wages. However, neither the restaurant nor the payroll service had any system in place for checking to see if employees were working at two different locations.
The court found that the restaurant owners should have known that the employees were employed at two locations.
Essentially, the court is saying that every employer needs to have a system in place to ensure that if an employee is working at two different locations, the employee is being paid overtime.
Interestingly, attorneys for Famous Dave’s argued that the employees had not complained that they were not being paid overtime. While this argument has been effective at times, the court rejected it, saying that this alone did not satisfy the good-faith requirement of the law.
