There are many legal and practical reasons for California employers to keep accurate, careful records of hours worked and wages paid. For example, federal and state tax and other deductions must be correctly calculated. California law also requires employers to include detailed payroll calculations on pay stubs.
A recent California Court of Appeal case out of the First Appellate District underscores the need for employers to keep accurate records of hours each employee works, especially overtime hours. In Furry v. East Bay Publishing, LLC, a sales and marketing director sued his former newspaper employer for unpaid overtime, among other things.
Employee estimate of hours sufficient
While the trial court had found that Furry's "imprecise evidence" of overtime hours worked was an insufficient basis upon which to calculate damages, the appeals court disagreed with the conclusion that Furry was precluded from recovering damages under these circumstances.
The Court of Appeal held that the trial court erred as a matter of law in concluding that Furry could not collect overtime damages. When an employer fails to keep accurate records of hours worked, as was the case here, the burden of proof is "relaxed." It becomes sufficient for a court to rely on the employee's recollections of those hours to calculate overtime damages, even if he or she is estimating.
The court explained that the employee should not have to suffer for the employer's failure to keep required records of hours worked.
Newspaper employer failed to meet burden
Furry presented evidence that he regularly worked evening and weekend hours over and above his regular workday hours. At this point, if an employee can show "sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference," the employer then has the burden to show the actual amount worked or to refute that the employee's estimates were reasonable. If the employer cannot show one of these things, the court can use the employee's estimates to determine damages, even though it is an approximation.
The court explained that it would be unjust to deny relief because of imprecise memory after the employee was able to establish unpaid overtime work had occurred, especially when the employer failed to keep required records. The court found that an employer's good faith belief that an employee is improperly classified as exempt is not a viable defense to a claim that the employer failed to provide adequate pay stubs.
Our experienced employment attorneys can provide advice and counsel to California employers about what payroll-related recordkeeping federal and state laws require.