Pharmacy Manager Fails To Prove Kaiser Had Actual Or Constructive Notice That He Was Working Off-The-Clock

In an appeal from summary judgment, a non-exempt Outpatient Pharmacy Manager (“OPM”) for Kaiser contended that the trial court erroneously held his proffered evidence insufficient to create a triable issue as to whether Kaiser knew or should have known that he was working hours in addition to those he reported.  The Court of Appeal for the First District affirmed the trial court’s judgment and held that none of the evidence offered by the OPM was sufficient to support a finding that Kaiser was aware of his unreported overtime hours.  (Jong v. Kaiser Foundation Health Plan, Inc., et al. (May 20, 2014, A138725)

Henry Jong ("Jong") worked as an OPM for Kaiser pharmacies between 2005 and 2010.  Prior to 2009, Jong and all other OPMs were classified as salaried employees, exempt from various wage and hour requirements.  The OPMs were subsequently reclassified as non-exempt hourly employees entitled to overtime compensation as a result of a class action settlement, alleging that the OPMs were misclassified and denied benefits to which they were entitled.  Jong alleged that at the time of reclassification, Kaiser issued a policy that forbade the payment of overtime and simultaneously refused to make any adjustments to OPM duties and responsibilities. 

Kaiser moved for summary judgment on the ground that Jong lacked evidence to prove that Kaiser failed to pay overtime for hours Jong worked that Kaiser knew or should have known that he worked.  Kaiser relied on Jong's deposition testimony, in which he testified that he was aware of Kaiser’s policy to pay for all hours worked and all overtime hours recorded, even if an employee should have obtained pre-approval before working the overtime but failed to do so.  He had also signed a document entitled “Attestation Form for Hourly Managers and Supervisors – Working Off-the-Clock Not Allowed.”  Plaintiff further testified that he did not record the hours he worked off the clock and was unable to recall the amount of off the clock hours he worked.

Jong contended that it was his responsibility to ensure the pharmacy stayed within a pre-determined budget and that he was reprimanded for failing to stay within budget due to too many overtime payments.  Jong claimed that he was placed in a position of deciding whether to report all hours worked and face discipline for failing to stay within budget, or refusing to report all hours to stay within budget and avoid discipline.  Jong further alleged that Kaiser knew its OPMs were routinely working over 50 hours per week due to discovery revealing as such in the prior class action.  The trial court granted Kaiser’s motion for summary judgment on the grounds that much of Jong’s evidence was inadmissible and that it failed to show that he – as distinguished from OPMs in general – was working off the clock.

Jong's cause of action was brought under Labor Code section 1194, which authorizes overtime wages, however the parties and the trial court also assumed the applicability of FLSA principles that federal courts have applied in similar cases.  The court saw no reason to question this basic premise on which all parties proceeded and relied on Forrester v. Roth’s I.G.A. Foodliner, Inc. (9th Cir. 1981) 646 F.2d 413, 414–15, which held that “where an employer has no knowledge that an employee is engaging in overtime work and that employee fails to notify the employer or deliberately prevents the employer from acquiring knowledge of the overtime work, the employer’s failure to pay for the overtime hours is not a violation of [29 U.S.C.] § 207(a).”

To establish Kaiser’s actual or constructive notice that Jong was working more hours than he reported, Jong relied on the prior deposition testimony given by 18 OPMs in the earlier class action indicating that they required more than 40 hours per week to perform their duties.  The court stated that the deposition testimonies might have provided notice that when these OPMs were exempt employees, many worked more than 40 hours per week, but this testimony “hardly put Kaiser on notice” that OPMs, and Jong in particular, worked in excess of 40 hours per week after they were reclassified and instructed not to work overtime without prior approval.

The court held that Jong, 1) knew of Kaiser’s policy that employees should be clocked in whenever they were working, 2) acknowledged that he was always paid for his recorded time, including overtime hours, 3) was never denied overtime if he requested it, and 4) signed the attestation form.  Under these circumstances , “evidence that Kaiser was aware that many OPMs worked more than 40 hours per week before being reclassified would not support a finding that after the reclassification Kaiser knew or should have known that Jong was not correctly reporting his hours.”


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