How Should an Employer Keep Time For an Exempt Employee?

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By: Don Samuels

Although it may seem counterintuitive that an employer should keep time for an exempt employee, there may be sound reasons at times for doing so.  In a recent case in California, Furry v. East Bay Publishing, LLC (January 4, 2019), the Court of Appeals of the State of California ruled that the consequences for failure of the employer to keep time records required by statute falls on the employer and not the employee.  In that situation, the Court indicated that imprecise evidence of time can provide a sufficient basis for damages. 

In Furry, the employee alleged, among other things, that his employer failed to pay minimum and overtime wages. After a bench trial, the trial court concluded the employer did not keep detailed records of the hours worked by the employer and failed to meet its burden of proof that the employee was exempt from the laws pertaining to overtime and minimum wage.  However, the trial court found the employee’s testimony regarding his work hours to be “uncertain, speculative, vague and unclear” and refused to award any damages for overtime and minimum wages. 

When reversing the trial court’s decision on the issue of damages, the Court of Appeals agreed with the employee that a relaxed standard of proof applies when the employer fails to keep time records.  The Court observed that “once an employee shows that he performed work for which he was not paid, the fact of damages is certain; the only uncertainty is the amount of damage.”  Under those circumstances, an employee can use “imprecise evidence,” such as time estimates from memory, to meet the relaxed standard that was applicable.

The Court explained the shifting burdens of proof: 

“[A]n 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 the 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.”

The Bottom Line

When an employer properly classifies employees as exempt, then time records and timekeeping do not seem important. However, if the exemption is challenged and not proper, then the employer may need evidence of the time worked or some other evidence or approximation of time worked. Without this evidence, the employer may be exposed to liability based on the testimony of the employee. Employers with questions regarding time recording or wage and hour laws would do well to consult with competent counsel.

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