Texas Court On Employer’s Failure to Keep Pay Records in FLSA Case

What happens when an employer fails to maintain accurate records of the hours worked by its employers and is sued for unpaid overtime?  It usually does not end well for the employer, as a federal court in the Western District of Texas recently illustrated.  In Mohammadi v. Nwabuisi, Cv. No. SA:12-CV-42-DAE (W.D. Tex., Jan. 2, 2014), the district court issued findings of fact and conclusions of law in an unpaid overtime case that was tried to the bench.  Below is a summary of the Court’s discussion of the issues involving the employer’s failure to maintain accurate pay records in this overtime case.

The Fair Labor Standards Act, of FLSA, requires employers to keep accurate records of the hours worked by employees. 29 U.S.C. § 211(c). The Supreme Court has recognized that placing this burden on the employer furthers the Act’s remedial purposes, because “[e]mployees seldom keep such records themselves,” and “even if they do, the records may be and frequently are untrustworthy.” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 686-87 (1946).

The employer’s records do not have to be in a particular form, but they must include, among other things, the names and addresses of employees, the workweeks for which their salary or wages are paid, hours worked during each workweek, the compensation paid, and deductions taken from paychecks. 29 C.F.R. § 516.2(a)(1)-(12).  Ordinarily, “an employee who brings suit for unpaid overtime compensation bears the burden of proving, with definite and certain evidence, that he performed work for which he was not properly compensated.” Reeves v. Int’l Tel. & Tel. Corp., 616 F.2d 1342, 1351 (5th Cir. 1980).  However, when an employer fails to keep complete and accurate records of an employee’s hours, “[t]he solution … is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work.” Von Friewalde v. Boeing Aerospace Ops., Inc., 339 F. App’x 448, 455 (5th Cir. 2009) (quoting Mt. Clemens Pottery Co., 328 U.S. at 687). Rather, in such a situation an employee is deemed to have met his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.  Id. (quoting Mt. Clemens Pottery Co., 328 U.S. at 687-88).

Thus, when an employer has failed to maintain the payroll records required by the Act, the employee may meet his burden through his own testimony, relying merely on his recollection, as to the approximate number of overtime hours worked.

In this case, the defendants failed to keep accurate and complete records of the hours that Plaintiff worked. Approximately half of the time cards Defendants produced did not indicate the day, month, or year to which they corresponded. See 29 C.F.R. § 516.2 (requiring records to contain this information). Defendants submitted the same time card for two separate weeks, and the time cards for seven other weeks are not time cards at all; they are merely spreadsheets listing the employees’ scheduled shifts for those weeks.  Finally, even though Plaintiff established through testimony and documentary evidence that she performed marketing work and provider visits during her lunch break, after hours, and on weekends, none of this time was captured in Defendants’ records.  In light of this evidence, the Court concluded that the plaintiff had worked overtime while working for the defendants, and awarded $38,425.36 in unpaid overtime, $38,425.36 in liquidated damages, and reasonable attorney’s fees and costs.  The defendants have appealed the trial court’s judgment.

This case illustrates a common misconception among both workers and employers regarding unpaid overtime claims.  Workers sometimes do not pursue their unpaid overtime claims, believing that because they do not have documented proof of the overtime that they worked, they cannot prevail on their overtime claim.  Employers likewise often fail to keep accurate pay records because they believe that a worker cannot prove his or her overtime case because there are no hourly records.  As this case shows, this is not true.  In fact, it is often to the employer’s disadvantage that hourly records were not kept.

Josh Borsellino is a Texas attorney that represents workers to get them the unpaid overtime they deserve.  If you believe you may have a claim for unpaid overtime, fill out this online form or call 817-908-9861or 432-242-7118 for a free consultation.