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Lax Record-Keeping Costs Employer $179K

The Fair Labor Standards Act (FLSA) sets the minimum wage and overtime pay requirements for employers. Within the FLSA, there are record-keeping requirements, including a list of 15 types of information employers must keep for up to three years. Compliance is not only required by law, but it can also be very helpful in the event of a lawsuit.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including overtime and FLSA requirements

Background
Mercedes Olivas worked for Francisco and Sara Rodriguez at A Little Havana Check Cash, Inc. (Little Havana), from September 2002 until April 2005. She earned $7 an hour and, under the FLSA, was entitled to earn time and a half at a rate of $10.50 per hour for any hours over 40 that she worked in a workweek. During the three years of her employment, the Rodriguezes never paid Olivas overtime wages for the overtime hours that she worked.

Olivas sued Little Havana and the Rodriguezes. When the case went to trial, the jury awarded her $29,799 in unpaid overtime and $150,000 for emotional distress.

The Rodriguezes admitted they owed Olivas overtime pay but argued that the jury award was excessive. They claimed that Olivas misrepresented the hours she worked throughout the trial (she claimed she worked every day for 132 consecutive weeks, averaging 83-85 hours per week). She submitted calendars and handwritten notes to support her claim, but the Rodriguezes claimed the hours she estimated were extreme.

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You need your time sheets
The court refused to modify the jury’s award for unpaid overtime. Because Little Havana had failed to keep sufficient records of its employees’ wages and hours, the court stated that the Rodriguezes couldn’t complain that the estimation of unpaid overtime lacked the exactness that it would have had if they had complied with the FLSA’s record-keeping requirements. As a result, Olivas only needed to show that she performed work that she wasn’t properly paid for and produce evidence that would enable the jury to infer the amount and extent of that work.

Olivas submitted the records that she kept. And even though she admitted her records weren’t accurate, she was able to present them as an example of the average weekly hours she worked. The Rodriguezes didn’t present any evidence about the amount of work she performed, so the jury was required to depend solely on Olivas’ calculation when determining the amount of overtime she was owed. Thus, any overestimation of overtime pay awarded was a result of Little Havana’s noncompliance with the FLSA’s record-keeping requirements.

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Bottom line
Time records and pay records are important. Not only does the law require them, but they can also help limit any liability that may be incurred for mistakes in compliance with the overtime provisions of the FLSA.