Summiting Mt. Clemens: The Fifth Circuit Reminds Employers that Failing to Maintain Accurate Time Records Could Be a Very Costly Mistake

The Fair Labor Standards Act requires employers to create and maintain accurate records of hours worked each workday and each workweek by non-exempt employees.  These types of records are commonly used to prove overtime and minimum wage violations—but what are employees supposed to do when their employer not only fails to properly compensate them, but also fails to properly create or maintain the very documents needed to prove their claims?

The United States Supreme Court addressed this conundrum in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).  There, the Court held that “where the employer’s records are inaccurate or inadequate,” the solution “is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work.”  Id. at 687.  To the contrary, the employee will be found to have met their burden “if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”  Then, the burden shifts to the employer “to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee’s evidence.”  But “[i]f the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.”

In other words, an employer “cannot be heard to complain that the damages lack the exactness and precision of measurement that would be possible had he kept records in accordance with the requirements of the [FLSA].”  Id. at 688.

Since Mt. Clemens, courts have had differing views on the nature and extent of evidence required to prove damages “as a matter of just and reasonable inference.”  The Fifth Circuit requires plaintiffs to offer more than “unsubstantiated assertions,” Harvill v. Westward Commc’ns, LLC, 433 F.3d 428, 441 (5th Cir. 2005), but has held that a plaintiff’s own testimony alone may be sufficient,  Hobbs v. EVO, Inc., 7 F.4th 241, 257 (5th Cir. 2021), even if their testimony only offers an estimated average of hours worked.  Reeves v. Int’l Tel. and Tel. Corp., 616 F.2d 1342, 1352 (5th Cir. 1980).

The Fifth Circuit recently confirmed this lenient standard in Flores v. FS Blinds, LLC, a case involving three installers of window blinds who claimed that their employer failed to pay them overtime in violation of the FLSA.  The installers testified as to their usual work schedules, and estimated that they worked an average of 70 hours per week.  Some of their testimony was corroborated by the company.  And, the installers produced copies of work orders documenting the jobs they completed during a “sample week.”

In addition to arguing that the installers were independent contractors rather than employees (a disputed issue that the Fifth Circuit has remanded back to the district court), the company challenged the sufficiency of the evidence demonstrating that the installers worked any overtime.  The district court agreed and granted summary judgment in favor of the company, finding that the installers had not met their prima facie burden to show they worked overtime.

The Fifth Circuit reversed, finding that the installers has “summited” their Mt. Clemens burden:

Based on the record before us, Plaintiffs have presented enough to satisfy their “lenient” prima facie burden under Mt. Clemens.  Their testimony alone would be sufficient.  This is so even though Plaintiffs’ testimony offers only an estimated average of hours worked.

In addition to their testimony, though, Plaintiffs offered supporting work orders and some corroborating testimony from FS Blinds.  All told, this record evidence hurdles Plaintiffs’ Mt. Clemens burden.

Flores v. FS Blinds, LLC, — F.4th —, 2023 WL 4484245, at *3–4 (5th Cir. July 12, 2023) (citations omitted).  The Fifth Circuit also found that the district court had “conflated the lenient Mt. Clemens standard with the more stringent standard that applies in other overtime cases:”

The district court relied on Garner v. Chevron Phillips Chemical Company, L.P., for the proposition that each Plaintiff must “prov[e], with definite and certain evidence, that he performed work for which he was not properly compensated.”  Garner, 834 F. Supp. 2d 528, 545–46 (S.D. Tex. 2011).  But as Garner itself makes clear, id. at 546, that standard applies in overtime cases where the employer has kept the required time records, not in Mt. Clemens cases.  Considering the record before us and under the proper standard, Plaintiffs have met their prima facie burden.

Id. at *4.

With respect to the company’s complaint that certain evidence suggested that the installers did not work 70 hours every single week, the Fifth Circuit found that it didn’t really matter: “To be sure, FS Blinds is correct that Plaintiffs’ schedules varied week-to-week.  But Plaintiffs have never asserted that they worked 70 hours every week.  Instead, they have consistently maintained that they worked an average of 70 hours per week.  Therefore, FS Blinds’s broad-brush contention that Plaintiffs could not possibly have worked 70 hours every week does not in itself overcome Plaintiffs’ overtime allegations.”  Id. at *5 (emphasis original).  In other words, the court found that the company’s evidence could be relevant to the overall amount of overtime the installers actually worked, but that it did nothing to “negate Plaintiffs’ proof that they in fact worked overtime for which they were not compensated.”  Id.

The lesson from Flores is that all employers need to ensure that they are creating and maintaining accurate time records for all non-exempt employees—and, of course, properly classifying their workers.  A mistake on either point can prove very costly.

If you have any questions about proper employment documentation, overtime compensation, or worker classifications, please contact the author of this post.