In our first installment on recordkeeping basics, we explored the type of time and payroll records that must be kept by employers and how long employers have to keep these records. Under both the Fair Labor Standards Act ("FLSA") and the Illinois Minimum Wage Law ("IMWL"), payroll records must be kept for 3 years and the FLSA further requires that additional wage and hour and business records be kept for 2 years.
Now, in the second part of recordkeeping basics, we will look at what effect an employer's failure to maintain records has on a case and who bears the consequences for the lack of records. The seminal case on recordkeeping remains the 1946 United States Supreme Court case of Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).
In Anderson, the Supreme Court created a burden-shifting framework that is triggered in cases where the employer does not keep the required records. (More on that below). Notably, the court also found that in situations where the employer fails to keep the proper records, the consequences of the failure should fall on the employer, not the employee. Anderson, 328 U.S. at 687. The court in Anderson reasoned that an employer cannot cry foul about a lack of numerical precision when its failure to keep records has contributed to it. Id. at 688.
In Anderson, the court held that where an employer keeps inaccurate or inadequate records, “an employee has carried out 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.” Anderson, 328 U.S. at 687.
The key for the employee is providing evidence of the amount and extent of his work sufficient to create a reasonable inference of an approximate number of hours worked that were not lawfully paid. Typically, the employee may rely on his own oral or written testimony deposition testimony in order to do so provided he can identify his work schedule (including work days and days off), his regular hours worked, his rate of pay, and how he was paid by the employer. The employee may also rely on a limited set of payroll records, use the testimony of co-workers, or create a damages spreadsheet evidencing his hours worked and unpaid wages.
If the employee makes a sufficient showing, the burden then shifts to the employer to provide “evidence of the precise amount of work performed or ... evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence." Id. at 687–88. Often, the trouble for the employer is that, without records, it becomes difficult (but not impossible) for the employer to rebut the employee's showing.
Remember the employer is required to show, with precision, the amount of hours worked by the employee or come up with other evidence that rebuts the employee's showing. Critically, under Anderson, the employers' inability to produce such evidence permits the court to award damages to the employee, "even though the result be only approximate.” Id. at 687–88.
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