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Allen v. City of Chicago

United States Court of Appeals, Seventh Circuit

August 3, 2017

Jeffrey Allen, et al., Plaintiffs-Appellants,
City of Chicago, Defendant-Appellee.

          Argued April 6, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 10 C 3183 - Sidney I. Schenkier, Magistrate Judge.

          Before Easterbrook, Manion, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge.

         This appeal arises from a Fair Labor Standards Act collective action. Plaintiffs are current and former members of the Chicago Police Department's Bureau of Organized Crime who claim that the Bureau did not compensate them for work they did off-duty on their mobile electronic devices (BlackBerrys). The case was tried to the court, Magistrate Judge Schenkier, presiding by consent under 28 U.S.C. § 636(c). The judge issued detailed findings of fact and conclusions of law in favor of the Bureau, finding that it did not prevent plaintiffs from requesting payment for such non-scheduled overtime work and did not know that plaintiffs were not being paid for it. Plaintiffs appeal, but we find no persuasive reason to upset the judgment of the district court. We affirm the judgment for the Bureau.

         I. The Fair Labor Standards Act

         We begin by explaining the standards that apply under the Fair Labor Standards Act when an employer asserts that it did not know of the overtime work for which employees claim they were not paid. The Act, codified as 29 U.S.C. § 201 et seq., requires employers to pay covered employees at one-and-a-half times their usual pay rate if they are employed for longer than a certain hourly threshold. That threshold is usually forty hours per week. § 207(a)(1). For law enforcement employees like these plaintiffs, the threshold is one hundred and seventy-one hours per twenty-eight day period. § 207(a)(1) & (k); 29 C.F.R. § 553.230(b).

         The statute defines "employ" broadly, as "to suffer or permit to work." § 203(g). That broad definition is central to the purpose of the Act. It helps prevent evasion by employers who might seek to issue formal written policies limiting overtime that are widely violated, or who might deliberately close their eyes to overtime work their employees are doing. See Kellar v. Summit Seating Inc., 664 F.3d 169, 177 (7th Cir. 2011) (employer cannot "sit back and accept" work without compensating it, even if employer has rules against overtime work), quoting 29 C.F.R. § 785.13. Employers must, as a result, pay for all work they know about, even if they did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work. Id., citing Chao v. Gotham Registry, Inc., 514 F.3d 280, 288 (2d Cir. 2008). If the employer does not want to pay overtime, its management must "exercise its control and see that the work is not performed." 29 C.F.R. § 785.13.

         That strict rule has a limit, however. It "stops short of requiring the employer to pay for work it did not know about, and had no reason to know about." Kellar, 664 F.3d at 177. The employer's knowledge can be either actual or constructive. Id. An employer has constructive knowledge of an employee's work if it should have acquired knowledge of that work through reasonable diligence. Hertz v. Woodbury County, 566 F.3d 775, 781 (8th Cir. 2009).

         One way an employer can exercise diligence is by establishing a reasonable process for an employee to report uncompensated work time. That principle has been at least implicit in our cases. In Gaines v. K-Five Construction Corp., 742 F.3d 256, 271 (7th Cir. 2014), for example, we affirmed summary judgment for an employer that did not know the plaintiff was working overtime. We reasoned, in part, that although the employer gave its employees a form on which to record their time, the plaintiff did not use the form as intended: he noted the overtime in a margin note on the wrong part of the form and omitted it when completing the appropriate section. That misuse prevented an inference that the employer knew about the overtime. Id.

         The Sixth and Ninth Circuits have been more explicit, affirming summary judgment for employers who set up processes for reporting overtime that the plaintiffs did not use. White v. Baptist Memorial Health Care Corp., 699 F.3d 869, 876 (6th Cir. 2012) (affirming summary judgment for employer: "When the employee fails to follow reasonable time reporting procedures she prevents the employer from knowing its obligation to compensate the employee ... ."); Forrester v. Roth's I.G.A. Foodliner, Inc., 646 F.2d 413, 414 (9th Cir. 1981) (affirming summary judgment for employer: "where an employer has no knowledge that an employee is engaging in overtime work and that employee ... deliberately prevents the employer from acquiring knowledge ..., the employer's failure to pay ... is not a violation of [§] 207"). We agree with their reasoning.

         But an employer's formal policy or process for reporting overtime will not protect the employer if the employer prevents or discourages accurate reporting in practice. White, 699 F.3d at 876 (distinguishing cases "where the employer prevented the employees from reporting overtime"). Such employer misbehavior might be overt. In Allen v. Board of Public Education, 495 F.3d 1306, 1316 (11th Cir. 2007), for example, plaintiff-employees were told that they should not record their overtime hours and that their employer would not pay overtime. Accurate time sheets were rejected, torn up, or edited. Or the employer might be more subtle. In Brennan v. General Motors Acceptance Corp., 482 F.2d 825, 827 (5th Cir. 1973), the employees' jobs demanded "long and irregular hours, " but their supervisors "insisted that all work be completed within certain defined time limits." The employer's practices effectively "squelched truthful responses" in overtime reports. Id. at 827-28.

         II. Factual and Procedural Background

         With that legal background, we turn to the facts of this case, which comes to us following a trial to the court. We therefore review the district court's factual findings deferentially, and our account of the facts tracks its factual findings. See Fed.R.Civ.P. 52(a)(6) ("Findings of fact... must not be set aside unless clearly erroneous ... ."). We focus especially on the court's findings about the Bureau's knowledge of plaintiffs' overtime reporting, the issue central to the district court's decision and this appeal.

         This case was brought by Jeffrey Allen and fifty-one other opt-in plaintiffs. Plaintiffs are current or former members of the Chicago Police Department's Bureau of Organized Crime. (Although the City of Chicago is the defendant here, the focus is on practices specific to the Bureau, though we must consider some actions of the larger Chicago Police Department.) The Bureau is a prestigious assignment for Chicago police officers. Its members conduct sophisticated investigations into, for example, gangs, narcotics trafficking, and human trafficking. Although members have scheduled shifts, the nature of their work sometimes requires them to work outside their shifts during what would otherwise be off-duty time. The police department issued plaintiffs mobile electronic devices (BlackBerrys), which they sometimes used in their off-duty work. This suit is over whether they were appropriately compensated for off-duty work on their BlackBerrys.

         The police department has a process that officers use to obtain overtime compensation: they submit "time due slips" to their supervisors. The slips are small; there is some space for explaining what work was done, and officers usually put a short, vague phrase in the space. The slip does not ask how the work was done, and officers do not typically include that information. Supervisors approve the time, and the slips are sent to payroll and processed. Plaintiffs regularly used that system; the fifty-two plaintiffs collectively reported and received pay for three to four thousand overtime hours per year from 2011 to 2014. But during the period relevant to this suit, many plaintiffs did not submit slips for off-duty work done on mobile electronic devices.

         The central question in the trial court was whether plaintiffs were prevented or discouraged from submitting slips by an unwritten policy of the Bureau's.[1] The district court certified an FLSA collective action before discovery then after discovery refused to decertify the collective action, denied summary judgment, and held a bench trial. ...

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