Posted on 28-Aug-08 by The Timekeeper

We already know employers have an obligation under the FLSA to keep accurate records of their employees’ time worked. And you may know if an employee claims they’ve been underpaid, the burden of proof normally rests on them to show they performed work for which they weren’t compensated.

So what happens when you’ve got a “he said, she said” kind of situation — where the employee offers evidence she wasn’t paid for work performed, but the company produces records that seem to show she was paid for all her hours worked?

Well, if it’s the case of Vivan Brown v. Family Dollar Stores of Indiana, you end up going to appeal… and the employer loses. Here’s why:

Vivian Brown was the assistant manager of a Family Dollar store when the manager was terminated. For a period of several months, including the busy holiday sales season, she assumed some of the duties of the store manager, but continued to be paid as an hourly employee.

Family Dollar Stores maintained their records showed she had been paid for all hours worked. Ms. Brown claimed managment altered employee time records to avoid paying for all the hours employees worked. As the plaintiff in the suit, normally the burden of proof would rest on Ms. Brown to show specific instances where she wasn’t properly paid. Unfortunately, she didn’t have any documentation of exact dates and times.

Now in this case, Ms. Brown, as acting store manager, was the only store employee who had a key — meaning she had to be there to open the store in the morning, and she had to stay to lock up at night. And it wasn’t just that. There was prep work that needed to be done before the store opened, and after it closed, which could take up to two hours of additional time. So if you know the hours of store operation, you could easily figure out whether the time showing on the payroll records was accurate.

And in this case, it was clear the hours reported by Family Dollar Stores could not possibly be right. In fact, in some cases, they actually showed her clocking out for the day over a half hour before the store closed for the night. Impossible, as there would then have been no one to lock up the store for the night (never mind take care of the additional two hours of prep work).

The original trial court ruled that since Ms. Brown didn’t have documentation of specific instances of not being paid, she hadn’t satisfied the burden of proof, and granted judgment in favor of Family Dollar Stores. But Ms. Brown appealed.

The Seventh Circut US Court of Appeals decided the evidence proved the records supplied by Family Dollar Stores couldn’t possibly be accurate, and that was sufficient to support Ms. Brown’s claims:

…where an employer failed to keep the proper and accurate records required by the FLSA, the employer rather than the employee should bear the consequences of that failure. To place the burden on the employee of proving damages with specificity would defeat the purpose of the FLSA where the employer’s own actions in keeping inadequate or inaccurate records had made the best evidence of such damages unavailable.

The Eleventh Circuit reached a similar conclusion in the case of Allen v. Board of Public Education for Bibb Cty. In both cases, the courts ruled it was possible to infer a reasonable estimate of the hours that must have been worked but which were not paid, even in the absence of specific documentation by the employee to contradict the inaccurate employer records.

And that this reasonable inference was sufficient basis for calculating a back pay award.

In other words, the FLSA requires you to maintain accurate records. Just because your employees don’t keep their own parallel documentation, that doesn’t get you off the hook if you haven’t been paying them for all their time worked.

I dunno, maybe I’m missing something here… what’s with all this changing time records to avoid paying employees for all their hours worked? That seems to me to be a recipe for creating disgruntled employees and finding yourself in court. Wouldn’t it be a lot easier (and cheaper, when you consider the kinds of fees lawyers charge) to just pay your people fairly and accurately to start with?

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