Thursday, October 31, 2019

Conduct of Parties Can Evidence Wage Agreements

Let’s say an employer has a policy that it does not pay for time before the employee’s regular workday if the employee arrives to work early because their personal schedule gets them to work ahead of schedule. And let’s say that the policy in question also cautions employees who arrive to work early because of their own personal convenience that they should not begin work until their scheduled time. But, let’s say that out of caution or the employer’s own convenience, it pays employees for their early arrivals because as management has stated on several occasions, it likes the fact that there are employees at work early. If the employer stops paying for this early arrival time, do employees have a claim for unpaid wages?

Such was the case recently addressed by the federal court in Illinois for the northern district. Plaintiff, on behalf of a class of employees similarly situated, sued their employer Freudenberg Household Products, LLC claiming that defendant paid employees for the time that they were at work, even if not actively working, but sometimes “shaved” their time, depriving them of all of their pay. The plaintiff and the putative class claimed that this time-shaving practice violated both the FLSA and the Illinois Wage Payment and Collection Act (“IWPCA”). The latter claim was based on the allegation that the plaintiff, and similarly situated employees, were not paid all of their wages on time, as required by the IWPCA.

The defendant company argued that its policy clearly states that it only pays for time worked by employees, therefore it does not owe wages when employees arrive early. Plaintiff alleged that an unwritten agreement existed that the company would pay for employee time outside of their regular hours of work and actually condoned and encouraged it. Evidence of that, according to Plaintiff, was that the company usually paid employees for their extra time. The company, on the other hand, argued that the policy controlled and therefore it did not owe additional wages.

The court found that Plaintiff’s claims could proceed. It noted that the IWPCA provides that wages are owed based on any agreement for such between the employer and employee. The court reminded the parties that an agreement on wages can be more informal than a written policy or contract. A binding agreement under the IWPCA can even be evidenced through the conduct of the parties, so the fact that the employer usually paid for time outside of the policy requirements could evidence an informal but binding agreement for wages.

Employers should be reminded that a claim for additional wages under the IWPCA can be based on something much less formal than a policy. A verbal agreement, or even a practice of paying, can form an “agreement” that is enforceable under the IWPCA. Employers should be mindful that generously paying for time that is otherwise not compensable over a period of time could be considered an agreement, despite what is written in your policies.