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Employee-rights attorneys have found some new ammunition in pursuing overtime lawsuits: a recent federal appeals court ruling that says employers must pay for overtime even if they didn’t approve it. The 2d U.S. Circuit Court of Appeals last month struck down workplace policies that say if employees did not get approval from supervisors in advance to work overtime, they won’t get paid for it. In a case that involved a nursing staffing agency that refused to pay for unapproved overtime, the court held that, if an employee works overtime, he or she must be paid for it, whether it was approved or not. Chao v. Gotham Registry Inc., No. 06-2432-cv. The ruling has already started showing up in pending wage-and hour-claims. “We probably have 20 cases that this decision assists us with,” said Justin M. Swartz of New York’s Outten & Golden. “I expect this decision to be widely quoted in federal courts across the country,” said Swartz, who recently cited the 2d Circuit ruling in a class action challenging a company policy prohibiting payment for overtime not approved in advance. Torres v. Gristede’s Operating Corp., No. 04-3316 (S.D.N.Y.). The ruling has triggered numerous Web alerts among management-side law firms, which are advising employers to strictly enforce restrictions on overtime, or be prepare to pay up. “It should send a warning to staffing agencies and to other employers who do not adequately police employee practices of working unapproved overtime,” said Jeff Pasek, a management-side attorney at Philadelphia’s Cozen O’Connor. “[T]he warning is, ‘if you work it, you pay for it.’ “ Pasek believes that the 2d Circuit ruling sets a dangerous precedent, particularly for staffing agencies that don’t have direct control over employee hours. For example, in the case of the nurses, he said the hospitals should have been held liable for the overtime, not the staffing agency, which, he argued, didn’t have the ability to oversee or approve the overtime. “Let the cost get passed along to the person who causes [the overtime],” Pasek argued. Pasek also defended employer overtime practices, noting that “overtime rules and policies are widely abused throughout the system” by both sides. A ‘disciplinary issue’ When overtime is abused, the employer’s remedy is to discipline the employee, not withhold overtime, said Joan Fife of the San Francisco office of Chicago’s Winston & Strawn. “This is a disciplinary issue, not a pay issue,” said Fife, who represents employers. She added that nonpayment of overtime is not an option. “A manager should be trained to know that even if overtime is not preapproved, it still must be paid.” Fife noted that policies requiring employers to get overtime approved in advance are still legal and enforceable. When overtime policies are violated, she said, employers can write up employees, deny them extra hours or even terminate them if the problem persists. But refusing to pay for unauthorized overtime is illegal, she said, adding that employers claiming they didn’t know about the overtime isn’t a defense. “There’s an argument under this case that even if the knowledge is delayed, they still have an obligation to pay the overtime,” Fife said. Management-side attorney Steven Parrish of the West Palm Beach, Fla., office of Broad and Cassel, said the recent ruling reinforces what employers knew already. “The general rule is that employers should enforce overtime policies through discipline, and not through refusal to pay unauthorized overtime,” he said. Parrish added that “this is in the 2d Circuit. It doesn’t mean that courts across the country are going to follow that line of thought.” Pasek thinks they will. “When the 2d Circuit court speaks, other courts listen,” he said. Employee rights attorney David Borgen of Goldstein, Demchak, Baller, Borgen & Dardarian in Oakland, Calif., believes that the 2d Circuit ruling will have broad applications. “The 2d Circuit is an influential court,” he said. “And, of course, it was a case that the Department of Labor participated in and their briefs are authoritative as well.” Borgen said that the ruling sends a strong message to employers everywhere: “They don’t get anything for free.”

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