Recordkeeping Failures Left Employer Vulnerable to Statistical Sampling in Overtime Claim
Author: Michael Cardman, XpertHR Legal Editor
March 24, 2016
A new Supreme Court ruling shows the importance of proper recordkeeping as a defense against wage and hour claims.
When an employer fails to keep records of the hours its employees work, employees can win overtime claims under the Fair Labor Standards Act (FLSA) if they can prove the amount and extent of their unpaid work as "a matter of just and reasonable inference."
This opens the door for employees to fill the gap with evidence like sworn testimony or, as in the case of Tyson Foods, Inc. v. Bouaphakeo, an expert witness's estimates of how long employees worked based on a statistical sampling of videotaped observations.
In the Tyson case, a group of 444 workers sued their employer Tyson Foods, claiming it violated the FLSA by failing to pay them and 3,344 other employees for time spent putting on and taking off protective clothing and equipment, as well as for time spent walking to their work stations.
A lower court used statistics to assess damages for the class instead of deciding damages individually for each employee, allowing the workers to prove damages to the class with evidence that likened all class members to an "average employee." A divided 8th Circuit Court of Appeals affirmed the damages award, finding that the class was properly certified.
The Supreme Court upheld these rulings, but declined to adopt "broad and categorical rules governing the use of representative and statistical evidence in class actions."
"Rather, the ability to use a representative sample to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action," the Court ruled. "In FLSA actions, inferring the hours an employee has worked from a study [such as the Tyson plaintiffs used] has been permitted by the Court so long as the study is otherwise admissible" (emphasis added).
The Court cautioned that inferences drawn from statistical samplings or other types of representative evidence will not count as a "just and reasonable inference" if they are "statistically inadequate or based on implausible assumptions." But because Tyson Foods did not challenge the methodology of the statistical sampling, the Court said there was no reason not to admit it into evidence.