Wage and hour law requires employers to keep true and accurate time records for payment of wages and overtime. This is usually a routine exercise with respect to non-exempt employees, for whom employers will have detailed records provided by payroll companies or their own payroll procedures which are required to show, among other things, the total daily and total weekly hours worked and the beginning and ending time of each work period, computed to the nearest unit of fifteen minutes. But time records are ordinarily not kept for employees who are considered exempt (although state regulations require salary payment records to be kept for exempt employees). Failure to keep accurate records can be a problem when employees who had been treated as exempt or as independent contractors assert a claim for unpaid wages.
When that happens, it often turns out that the employee has been keeping his own time records, and will offer detailed notebooks or spreadsheets showing hundreds of allegedly unpaid hours, which the employer can have difficulty in refuting. A recent decision of the Connecticut Appellate Court, Evans v. Tiger Claw, Inc., describes the method that courts use to analyze this type of claim.
The plaintiff was a salesman who was treated by the defendant as an independent contractor, and was paid on a commission basis. At the trial of his lawsuit for unpaid wages, he produced several spreadsheets which he claimed were contemporaneous records of daily administrative work over a three-year period, for which he claimed compensation on an hourly basis. The defendant had no time records of its own, instead responding with testimony that the plaintiff’s claims were not credible.
The Appellate Court applied an analysis derived from a 1946 U. S. Supreme Court case, Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, which can be summarized as follows:
- If the employer has maintained accurate and proper records of wages and hours, the employer’s records will govern;
- If the employer’s records are inaccurate or inadequate, the employee may produce his own evidence of work performed for which he claims compensation;
- The employer then has the burden of producing other evidence of work performed or evidence negating the employee’s records;
- But the employee has the ultimate plaintiff’s burden of persuading the court in his favor, so that if the employer can show that the employee’s claims are not credible, the employer can win the case even without time records.
Which is what happened in the Evans v. Tiger Claw, Inc. case. The employer’s witnesses were able to refute the claims, and the trial court found that the employee’s spreadsheets were not contemporaneous records, and that the number of administrative hours claimed by the plaintiff was “not believable, and in some instances, barely humanly possible.” In short, the trial court did not find the plaintiff to be credible, and so was not persuaded that the plaintiff was owed any unpaid wages.
However, the takeaway is that an employer cannot count on an employee’s overreaching and making a poor witness. Proper classification of workers, and accurate and complete payroll records for both non-exempt and exempt employees, are the best defense against unpaid wage claims.