The Sixth Circuit Court of Appeals (which oversees Tennessee, Kentucky, Ohio, and Michigan) recently issued a ruling in favor of an employer related to an employee’s alleged claim under the Fair Labor Standards Act (“FLSA”). The Court of Appeals found that the employee’s testimony regarding the number of hours he allegedly worked on a weekly basis was too conclusory and vague to succeed. This decision clarifies the evidence an employee must present to show whether they worked overtime without proper compensation.
Background
The employee originally invested in the company that the employer created and they came to an arrangement on how pay would be calculated. They also worked out who would be in charge of what aspects of the company’s operations. The employer treated the employee as an independent contractor and issued him an Internal Revenue Service Form 1099 every year, not the W-2 issued to employees. The employee was able to set his own work schedule, did not track his hours, and received a fixed sum based on the actions he completed, which included a commission.
Eventually, the relationship began to sour and it created problems between the two men and related company issues. The employee sued the employer under the FLSA claiming that he had been an employee all along, not an independent contractor, and that the employer violated the FLSA by failing to pay him overtime wages. The employee alleged that he worked approximately 60 hours per week, but provided no written evidence to support this claim.
The district court ruled in favor of the employer. The court assumed, for the purposes of the ruling, that the employee was actually an employee but ultimately concluded that the employee’s evidence that he worked more than 40 hours per week was not sufficient. The district court described the employee’s testimony about the hours he had worked as “equivocal, conclusory, and lacking in relevant detail.” As a result, the district court found that the employee was not entitled to damages or recovery of his expenses under the FLSA.
Court of Appeals’ Decision
The FLSA requires employers to pay employees overtime at a rate not less than one and a half times the regular rate of pay for every hour worked over forty in a workweek. Employees who claim they were not paid properly under the FLSA carry the burden of proof, requiring them to prove that they performed work that was not properly compensated. To meet that burden, an employee may request time and pay records from the alleged employer. Absent such records, the employee may still attempt to establish damages by producing sufficient evidence to show the amount and extent of uncompensated work “as a matter of just and reasonable inference.” This relaxed burden applies once the employee has met his initial burden of showing that he performed uncompensated overtime work.
In its analysis, the Court of Appeals focused on whether the employee had met this initial burden. The court affirmed the district court’s conclusion that the employee’s testimony was too “equivocal, conclusory, and lacking in relevant detail” to create a genuine issue that would prevent the court from ruling in favor of the employee. In coming to its analysis, the court looked to two similar cases and found that the employee’s case more closely resembled a prior case finding that an employee claiming to have worked 60 to 70 hours per week, without providing additional details showing that the tasks performed would have required more than 40 hours, was not sufficient.
Here, the employee merely alleged that he worked approximately 60 hours per week, but he failed to support his estimate with specific facts about his daily schedule. Although he pointed to some vague emails, which took place “at all hours of day and night,” described the nature of the business, and pointed to the employer’s volume of business, the court found this evidence lacking in specificity. The Sixth Circuit affirmed the district court’s holding that this vague evidence “would not allow the jury even to ‘hazard a guess as to how many hours’ he worked.”
Takeaway
This decision is a positive development for employers, at least in the Sixth Circuit. While the appellate court noted that employees are not expected to recall their work schedules with perfect accuracy, without more, conclusory self-serving estimates and barebone allegations about an employee’s workweek are insufficient to permit a jury to conclude that the employee even worked overtime. This decision helps clarify the standard that employees cannot bring speculative or bareboned allegations against an employer as to the hours they allegedly worked. This, in turn, helps strengthen an employer’s defense against such claims. Of course, the best front line defense against FLSA claims, is for employers to ensure that they are in compliance with the FLSA, and to classify and compensate their employees as required by law, while keeping accurate and detailed records. Proactive internal audits to ensure that practices and policies are in compliance with the FLSA are a cost effective tool which employers should not neglect. As Ben Franklin long ago noted, “An ounce of prevention is worth a pound of cure.”
R. Eddie Wayland is a partner with the law firm of King & Ballow. You may reach Mr. Wayland at (615) 726-5430 or at rew@kingballow.com. The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.