By Bruce M. Luchansky, Esq. Introduction Employers in Maryland and Washington, D.C. face complex wage and hour challenges—particularly when it comes to overtime obligations under the Fair Labor Standards Act (FLSA). One recurring question is: 👉 Must an employer pay overtime if it did not know the employee was working extra hours? A recent federal appellate decision provides an employer-friendly answer. The General Rule Under the FLSA The FLSA requires employers to pay non-exempt employees overtime for any hours worked beyond 40 in a workweek. In most situations, employers are aware of overtime work because: But what happens when the employer claims it had no knowledge of the overtime work? When Knowledge Becomes the Key Issue The legal question becomes: 👉 Did the employer have actual or constructive knowledge that the employee was working overtime? If the answer is no, the employer may not be obligated to pay. The Fifth Circuit’s Decision In Merritt v. Texas Farm Bureau, 166 F.4th 490 (2026), the Fifth Circuit held that an employee could not recover overtime compensation because the employer lacked both actual and constructive knowledge of the overtime work. The court rejected two key arguments from the employee. Argument #1: “Permitting Work Is Enough” The employee argued that because the employer allowed him to work unlimited hours, knowledge of overtime was irrelevant. The court disagreed. It emphasized that employees must still prove that the employer: that overtime work was being performed. Simply allowing work to occur is not enough. Argument #2: No Timekeeping System = Knowledge The employee also argued that the employer’s failure to maintain a timekeeping system created constructive knowledge. Again, the court rejected this argument. It made clear that: 👉 A lack of timekeeping does not automatically shift the burden to the employer. The employee still must prove that the employer had knowledge of the overtime work. How This Applies in Maryland The Merritt decision comes from the Fifth Circuit, which covers: Maryland falls under the Fourth Circuit, which has not adopted this exact standard. However, the decision may still be persuasive. The Fourth Circuit’s Approach The Fourth Circuit generally applies a more evidence-driven analysis. For example, in Lyle v. Food Lion, Inc., employees successfully proved employer knowledge by showing: Additionally, in Figueroa v. Butterball, LLC, the court emphasized that: 👉 Employers have a duty to maintain accurate records. Failure to do so can shift the evidentiary burden and allow employees to rely on their own testimony. Key Takeaways for Employers The lesson is clear. Employers should protect themselves by: 1. Proper Classification Avoid misclassifying: 2. Strong Timekeeping Practices Maintain accurate and reliable records of employee hours. Why This Matters Overtime claims can be extremely costly. Employees may recover: Even smaller cases can easily exceed $100,000. Final Takeaway While the Fifth Circuit’s decision provides helpful guidance for employers, it does not eliminate risk. 👉 Knowledge still matters.👉 Documentation still matters. Employers who implement clear policies and maintain strong records are in the best position to defend against overtime claims. How Luchansky Law Can Help Luchansky Law assists employers with: