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5 steps for an employer to win an off-the-clock overtime claim

By Jonathan Hyman on March 18, 2026
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Jerry Merritt, an agency manager for the Texas Farm Bureau, claimed 816 hours of unpaid overtime. Even assuming he had been misclassified as an independent contractor, he still lost.

Here’s why.

Merritt ran his role with near-total autonomy: He set his own schedule. He chose how much to work or not work. He didn’t track or report hours because the company paid him on a commission (over $500k/year).

Even assuming he was an employee entitled to overtime, he still had to prove one thing:

👉 His employer knew—or should have known—he was working overtime.

A jury said no. The 5th Circuit agreed.

The key rule upon which the court relied: No knowledge = no overtime liability.

Merritt argued: “You let me work as much as I wanted.”

Not enough. Flexibility ≠ knowledge.

He argued: “You didn’t track my time.”

Still not enough. Lack of records ≠ constructive knowledge.

He argued: “I didn’t have to tell you when I was working.”

Wrong. How else was the employer to know he was working.

Step back and look at the result:

Misclassification (assumed)

Significant overtime

No time records

…and the employer still wins. Because it lacked actual or constructive knowledge.

Before anyone gets the wrong idea, this case is not a green light to ignore timekeeping. It’s a reminder of where the real risk lives. Most employers don’t lose overtime cases because they lacked knowledge. They lose because the facts show they should have had it. That’s the difference between winning and writing a check.

If you want to stay on the right side of that line, here are a few practical takeaways:

First, make it crystal clear that employees must report all time worked. Not some. Not “approved” time. All of it.

Second, train your supervisors and managers. If they see employees working late or through lunch, responding to emails after hours, or grinding through weekends, they can’t just shrug and move on. That’s how “we didn’t know” turns into “you should have known.”

Third, pay for the time that gets reported—even if it violates policy. You can discipline the violation. You can’t withhold wages.

Fourth, don’t build a culture that quietly discourages overtime reporting. Courts see right through that.

Fifth, and finally, be careful with autonomy. It helped this employer because the independence was real. No oversight, no visibility, no reason to track hours. But autonomy won’t save you if it’s just a convenient way to avoid looking too closely.

You’re responsible for what you know. You’re also responsible for what you should know. But you’re not automatically responsible for what an employee chooses to do—on their own, without telling you, and without giving you any reason to suspect it’s happening. That distinction made all the difference here.

     

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Photo of Jonathan Hyman Jonathan Hyman
Jon Hyman is a trusted advisor to small and mid-sized businesses across various industries, helping them solve workforce challenges and defend against legal disputes.
He is a shareholder at Wickens Herzer Panza in Avon, Ohio, where he chairs the firm’s Employment and Labor
…
Jon Hyman is a trusted advisor to small and mid-sized businesses across various industries, helping them solve workforce challenges and defend against legal disputes.
He is a shareholder at Wickens Herzer Panza in Avon, Ohio, where he chairs the firm’s Employment and Labor practice group and its Craft Beer practice group, and serves on the firm’s Board of Directors. Jon works closely with clients on all aspects of labor and employment law, providing proactive solutions to prevent issues and a strong defense in litigation when conflicts arise.
As outside in-house counsel, Jon is the go-to advisor businesses call when they need help with employee terminations, drafting policies, handling leave or accommodations, or navigating tricky internal complaints. He also brings deep expertise in areas like wage and hour compliance, workplace technology issues, and union avoidance. Jon builds lasting partnerships with his clients, understanding their unique challenges and helping them achieve long-term compliance and success
When it comes to litigation, Jon stands up for businesses in disputes over discrimination, harassment, wrongful discharge, non-competes, trade secrets, wage and hour issues, and union matters. Jon works with his clients to craft targeted defense strategies that protect their interests and aim for resolutions that support their broader business goals.
Jon also leads the firm’s Craft Beer practice, where he helps breweries, brewpubs, taprooms, and other craft beer businesses tackle their unique legal and regulatory needs.
Jon writes the award-winning Ohio Employer Law Blog, which the ABA Blawg Hall of Fame recognized for its daily insights on labor and employment law. His updates help his clients, HR professionals, and other business leaders stay ahead of labor and employment law changes that impact their daily operations.
Read more about Jonathan HymanEmailJonathan's Linkedin Profile
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  • Posted in:
    Employment & Labor
  • Blog:
    Ohio Employer Law Blog
  • Organization:
    Wickens Herzer Panza
  • Article: View Original Source

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