By: Carol G. Schley, Clark Hill PLC

Recently, a federal appellate court determined that the lack of a comma in an overtime statute rendered the statute ambiguous, resulting in an employer being potentially required to pay $10,000,000 in overtime pay to its employees.  While this case involved a Maine overtime statute, it provides important practical lessons for all employers.

The case, O’Connor v. Oakhurst Dairy, 2017 U.S. App. Lexis 4392 (1st Cir., Mar. 13, 2017), concerned a statute that exempted from overtime compensation any employees who worked on the following tasks:

            … canning, processing, preserving, freezing, drying, marketing, storing, packing for shipment or distribution of: (1) Agricultural produce; (2) Meat and fish products; and (3) Perishable foods.

              The language in dispute in O’Connor was “packing for shipment or distribution.”  The employer argued that “packing for shipment” and “distribution” were two separate tasks identified in the statute and, therefore, because its delivery drivers were involved in the “distribution” of products, the drivers were exempt and not entitled to overtime.  The delivery drivers argued that because there was no comma after “shipment” in the statute, the last category of exempt workers in the statute were required to be involved in packing (i.e., either packing for “shipment” or packing for “distribution”).  The delivery drivers argued that because they did not perform any “packing” in connection with their jobs, they were not encompassed by the statute and therefore were entitled to overtime.

              The O’Connor court analyzed in detail the lack of a comma after “shipment” in the statute, finding various arguments asserted by both sides to be credible, but also rejecting various other arguments by both sides as unpersuasive.  In the end, the Court found that the lack of the comma rendered the statute ambiguous and, therefore, the court construed the ambiguity in favor of the delivery drivers, “as that reading furthers the broad remedial purpose of the overtime law, which is to provide overtime pay protections to employees.”  The case was then remanded to the lower court for further deliberations, and the overtime pay owed by the employer to the delivery drivers under the statute may reach $10,000,000.

Despite concerning a Maine statute, there are good lessons for all employers to glean from the O’Connor decision:

  1. Take care in preparing employment-related documents. While this lesson should go without saying, it is surprising how often employment documents, such as employment agreements and employee handbooks, are unclear, contain typographical errors, or otherwise don’t correctly express what the employer intends.  As the O’Connor case demonstrates, something as small as a missing comma can cause big trouble for employers.  The extra time it takes to carefully draft a document and have it reviewed by knowledgeable individuals is well worth it, as doing so may avoid confusion, employee disputes, and potential litigation down the line.
  1. Don’t rely on forms or boilerplate. Too often, employers try to save time and money by using old forms for new issues, or by using “off the shelf” forms from books, office supply stores or the internet.  Doing this can create a host of issues, as such forms may not be compliant with current employment laws, which are always evolving.  Further, such forms may fail to be compliant with the law of an employer’s particular state and lack necessary and required provisions.
  1. Periodically review your agreements, forms, and manuals. Not only does the law change over time, but the needs of an employer may change as well.  Even if an employer is not aware of any issues or problems, it should periodically review its employment-related documents to ensure they continue to meet the needs of the employer and to make revisions as necessary to avoid potential future problems.
  1. Consult Counsel. When in doubt, or when a document is important (which, in the author’s opinion, all employment-related documents are), it is worth having legal counsel assist with reviewing and drafting.  Beyond just being a second set of eyes on a document to catch ambiguities and errors, legal counsel can also ensure that necessary provisions are included, unlawful provisions are deleted, and that a document clearly expresses the wishes and intent of the employer. 

Carol G. Schley is a member of the Detroit SHRM Legal Affairs Committee and an attorney at the law firm Clark Hill PLC.  She can be reached at cschley@clarkhill.com or (248)530-6338.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information is included in the re-post of the article. April 2017.