Recently, the Connecticut Appellate Court was called upon to decide an “unpaid wages” case, Evans v. Tiger Claw, Inc. The ruling contains important reminders for all businesses.
Facts of the Case
The plaintiff, Christopher Evans, worked as a salesman at Tiger Claw, Inc. The company paid him on a commission basis and classified him as an independent contractor. Because the company was a start-up without much in the way of support staff, Evans agreed in addition to his sales duties to perform non-sales-related administrative tasks, for which he would be paid hourly.
The amount he was to be paid was to be based on time records he submitted himself. (Note: not on independently-recorded start and stop times, such as one would get from a punch clock or time and attendance software. Big mistake!)
Evans submitted a time sheet for the first month he performed these administrative duties. For some reason, though, he was never paid for that month’s work — and he apparently never followed up to ask for payment. Furthermore, he failed to submit any more time records for the remainder of his employment with the company. (As an aside: this is particularly inexplicable to me, especially given the amount of time worked he claims in his subsequent lawsuit. But I’m getting ahead of myself here. Back to our story…)
So, naturally, having submitted no reports of time worked, he didn’t get paid for any administrative time. No surprise there.
At some point, Evans submitted an enormous batch of time sheets which he claimed showed all the time he’d spend on administrative duties over the past two+ years. The company apparently responded that they didn’t believe he was entitled to all this pay he was claiming and refused to pay him anything. Reading between the lines of the court decision, it seems shortly after that, Evans simply stopped showing up for work. Roughly four weeks later, the company’s lawyer sent a letter to Evans officially terminating his employment.
This is where it starts getting a little tricky. OK, a little more tricky.
The company paid Evans what it thought were all outstanding commissions and assumed they were done. Evans had other ideas. First, he complained to the state Department of Labor, claiming he was owed nearly $192,000 in back wages. When they concluded there had only been some improper deductions from his commission checks and awarded him $3,600 in back pay, he withdrew his complaint and filed a lawsuit.
After reviewing the plaintiff’s documentation and other associated records, the court decided Evans was entitled to $13,630, representing the improper deductions plus some additional unpaid commissions. On appeal, the case was remanded to the lower court to determine if Evans was due any money related to the alleged administrative tasks.
After a review of the timesheets Evans had submitted, and testimony by the company’s owners, the court concluded the number of administrative hours Evans listed on his timesheets was “not believable (and, in some instances, barely humanly possible), especially when coupled with the plaintiff’s primary 40-hour-per-week job as a sales representative…”
Further, the court found “…from a review of the spreadsheets and an analysis of the evidence as a whole, particularly the plaintiff’s own testimony, the court finds that the plaintiff busied himself with projects that he invented for himself which had only incidental value to the company…” and “…despite the time records constructed by the plaintiff, the plaintiff’s descriptions of the time worked are so vague and sometimes contradictory that his account of his many hundreds of hours spent on administrative tasks simply does not ring true.” Accordingly, the court decided Evans was entitled to only the $13,630 originally awarded.
Predictably, Evans appealed again, but this time the decision was upheld.
Lessons to be Learned
This story is a case study on why you should record work time for all employees and contractors, no matter whether you’re paying them by the hour or whether they’re entitled to overtime. Most of this protracted (and expensive) lawsuit could have been avoided had the company only had their own records of Evans’ time worked!
Why? Well, the story illustrates the process courts will go through when there’s a dispute over the number of hours someone is claiming to have worked:
- First, if the compay has “proper and accurate” time records, the court will usually accept these.
- If the employer’s records are “inaccurate or inadequate” (which would include being completely nonexistent, as in this case), the burden shifts to the employee to produce their own time records to show the number of hours they claim to have worked.
- At that point, the burden shifts back to the employer to either show evidence to prove the employee worked a different number of hours, or at least to prove the employee’s records are not credible.
If the employer can’t prove the employee’s records are wrong, the court will usually rely on the the employee’s records in awarding back pay.
In this case, the company was lucky. They were able to show Evans’ records were not credible, so the court declined to award back pay based on them. Had just a few circumstances been just a little different, the case easily could have gone the other way.
Protecting Your Business
Naturally, you don’t want to find yourself in a similar situation. If the employee suing you comes up with more credible time records, you could find yourself on the hook for thousands of dollars in back pay — that the employee might (or might not) be entitled to.
Track time for everybody. Hourly workers and salaried workers who are eligible for overtime (of course!), but also exempt salaried workers and independent contractors. You never know when the Department of Labor might show up for an audit. All those workers you thought were exempt from overtime could be reclassified in an instant, and suddenly you’ll need to try to re-create time records for every one of them.
Think how much easier (and potentialy cheaper!) it would be if you already had those time records to start with!
Fortunately, all that time-tracking doesn’t have to be a chore. Acroprint offers a variety of solutions, from traditional timecard-based punch clocks, to time and attendance software, to sophisticated cloud-based workforce management that includes everything you need to manage your employees from hiring to retiring, including time and labor tracking, payroll, scheduling, and human resources management tools. I can’t promise it will be fun, exactly, but we surely can make it easy.
Visit our online store and check out all the possibilities!