Last week, the U.S. Court of Appeals for the Eighth Circuit ruled in Holaway v. Stratasys, Inc. that an exempt employee claiming he was not paid overtime bears the burden of establishing he was entitled to overtime pay. Although the decision is limited to its specific facts, the decision reminds employers who face claims of overtime violations under the Fair Labor Standards Act (FLSA) of the importance of properly classifying exempt employees. Under the law, employees face a relatively simple burden of establishing claims of failure to pay overtime and may support their claims by simply providing estimates of time worked over forty (40) hours.
In Holaway v. Stratasys, Inc., the Eighth Circuit held an employees unsubstantiated testimony alone was insufficient to meet the burden of establishing a violation of the FLSA. The facts of the case are relatively simple and commonly faced by employers. Stratasys, Inc. classified Holaway, a field service engineer, as exempt from the FLSA overtime requirements. Because Holaway was exempt, Stratasys, Inc. did not keep detailed records of the hours Holaway worked for the company. Holaway, who worked independently from home and on call, claimed that he regularly worked more than forty (40) hours a week installing the companys printers for customers. In support of his claim, Holaway provided only his own testimonial evidence that he regularly worked in excess of forty (40) hours per week, estimating he worked an average of sixty (60) hours per week.
The U.S. District Court for the District of Minnesota granted summary judgment in favor of the employer on the basis that Holaway did not provide sufficient evidence to support his claim. On appeal, the Eighth Circuit agreed. Under the FLSA, employers are only required to keep wage and hour records for non-exempt workers covered by the FLSA. When employers fail to keep detailed work records, employees generally need only provide evidence sufficient to create a reasonable inference that he or she worked the hours claimed without compensation. The employer then may refute the reasonableness of the inference with its own evidence. This relaxed burden of proof prevents employees from being penalized for an employers failure to keep detailed time records. In Holoway v. Stratasys, Inc., the Eighth Circuit held that, although Holaway is not required to prove the precise extent of uncompensated work, Holaway failed to meet even the relaxed evidentiary standard because he failed to put forward any evidence of the amount and extent of his work in excess of forty hours a week for any week worked from Stratasys, let alone evidence of excess hours worked every week of his employment. The court declined to address the issue of whether or not Holaway was truly an exempt employee under the FLSA in light of his failure to present evidence that he worked over forty (40) hours in any work week.
Analyzing the evidence presented by Holaway, the court noted employees are not denied recovery under the FLSA simply because they cannot prove the extent of their uncompensated work. Even in cases where an employer has failed to keep detailed records, employees are to be awarded compensation based on the most accurate basis. Holaway did not explain how he calculated his estimate of an average of sixty (60) hours per week or identify specific days and weeks in which he worked long hours. The court noted Holaways estimations also failed to account for holidays, vacation and duty days in which he didnt receive any calls to install printers for customers. The court found Holaways reliance on vague testimony and contradictory and bare assertions, without any specific information, insufficient to explain his estimate that he worked an average of sixty (60) hours per week.
After Holaway v. Stratasys, Inc., employers should remember that a failure to pay for time worked or overtime can be costly. Despite the victory for Stratasys, Inc., employees improperly classified as exempt can easily establish their claims in court by providing testimonial evidence and estimates of hours worked to create a reasonable inference that he or she worked the hours claimed without compensation. Whether or not an employee is truly exempt under the law can be difficult to determine and classification errors can subject employers to significant penalties, in addition to inviting wage and hour claims to collect unpaid overtime. In light of increased efforts to address wage and hour violations, including the Department of Labors smartphone app to help employees track hours worked, employers should carefully review the classification of employees as exempt.
The St. Louis employment attorneys at McMahon Berger have been representing employers across the country in labor and employment matters, including those relating to wage and hour compliance, for almost sixty years, and are available to discuss these issues and others. As always, the foregoing is for informational purposes only and does not constitute legal advice regarding any particular situation as every situation must be evaluated on its own facts. The choice of a lawyer is an important decision and should not be based solely on advertisements.