What are the importance of wage records in employment disputes?

Under the federal Fair Labor Standards Act, non-exempt employees are entitled to overtime for hours that are worked over a 40-hour workweek at a rate of 1½ times their normal wage rate. These workers have the right to file a legal action to recover any unpaid overtime wages. However, they also assume the burden of proving that they performed work for which they were not adequately compensated.

Employers must keep wage records for their employees under FLSA. Where an employer has not kept records, however, employees can still seek overtime wages. The issue is decided on the most accurate information available. In other words, once a worker shows evidence of performing work that was not compensated, the employer must produce evidence to dispute any inferences that can be gleaned from the worker’s evidence.

For example, a field service engineer who worked from his home sought overtime wages from his employer. The employer did not keep records of overtime work because the worker was a salaried employee and the employer believed that he was exempt from overtime wages.

However, the U.S. Eighth Circuit Court of Appeals, which includes Minnesota, upheld the claim’s dismissal because the employee did not present evidence of the amount and extent of his work for more than 40 hours for any specific week that he worked. Moreover, he presented no evidence of working more than 40 hours per week.

However, a business may have to pay overtime wages in addition to wages for a 40-hour workweek, incur other penalties and suffer the impact of other business disputes by keeping inadequate records in many cases. FLSA and Minnesota’s own wage laws may impose sanctions on employers who do not keep appropriate employee records.

Businesses should seek legal assistance to prepare records and classify employers. Legal advice can help prevent litigation over employment disputes or help prevent or mitigate any penalties that may be imposed where legal cases are initiated.

Source: FindLaw, Holaway v. Stratasys, Inc., No. 14-1146 (8th Cir. 2014)

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