A U.S. Court of Appeals for the Second Circuit[i] has recently ruled that employers subject to the Fair Labor Standards Act (FLSA) are required to compensate employees for overtime, regardless of whether the employee requests overtime compensation. An employer violates the FLSA when it does not pay overtime wages for work it “suffers or permits,” that is, work it requires, knows about, or should have known about.

The facts of the Second Circuit case show that while the employer knew its workers were performing unreported extra-shift work, it took insufficient action to remedy the situation or confirm its assumption – that it had no obligation to pay overtime unless specifically requested to do so – was in fact lawful.

According to the Court, “whether an employer knows an employee is not being paid is irrelevant to FLSA liability.” In this instance, the employer’s knowledge that work was being performed was sufficient to trigger its obligation to pay for all work it knows about or requires, even if the employee does not specifically request compensation for it.

What does it all mean?

Whether an employee reports overtime work will often be relevant to an employer’s knowledge of the work, but allowing, or even requiring, an employee to report overtime work will not absolve employers of the obligation to compensate for work they suffer or permit.

Key Takeaway

All employers should understand that when it comes to wage and hour compliance under state or federal law there are no magic words. If an employer suffers or permits the work—either by requiring it, knowing about it, or failing to exercise reasonable diligence to discover it—then it must compensate the employee, even if the employee failed to report the work and even if the employer did not know that the employee was working unpaid.

[i] Perry v. City of New York, 2nd Cir., No. 21-2095 (August 2023).