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New Court of Appeal Decision Re: Liability Standards for Timekeeping and, Separately, Meal Period Pay

by D. Gregory Valenza | | February 4, 2019

The Court of Appeal’s decision in Furry v. East Bay Publishing , LLC (opinion here) covers two important wage and hour issues: time records, and meal period liability. 

Terry Furry was employed as an advertising salesperson, and then “marketing director”  with East Bay Publishing.  He worked regular business hours at the office.  But he also worked at night and on weekends, and attended events outside work hours and was due overtime for that work.  If East Bay intended to classify him as an executive, exempt from most wage and hour laws, it didn’t pay him a sufficient salary regardless of his duties. So, there was no basis for excluding overtime or failing to comply with the Wage Statement requirements contained in Labor Code section 226.  He also was entitled by law to meal periods.

Overtime and Recordkeeping

East Bay did not track Furry’s hours worked.  The trial court conducted a bench trial on Furry’s wage hour claims, including for unpaid overtime and associated other claims.  The trial court found for East Bay, in part finding:

East Bay did not keep detailed records of the hours worked by Furry and failed to meet its burden of proof that Furry was exempt from the laws pertaining to overtime, minimum wage, and meal and rest breaks. However, the trial court concluded that Furry was not entitled to unpaid overtime pay because he “failed to present sufficient evidence regarding the amount and extent of his work to allow the Court to draw a just and reasonable inference that he engaged in any work for which he was not paid.” The trial court found Furry’s testimony regarding his work hours to be “uncertain, speculative, vague and unclear.” The court also noted that Furry “failed to account for hours worked for which he was compensated by the commissions he received from the events described above.”  *** Any attempt by this Court to determine the amount, if any, of uncompensated overtime hours, even a rough approximation of said hours, would be pure guess work and unreasonable speculation on the Court’s part.” 

The Court of Appeal reversed the trial court on Furry’s overtime claim.  Contrary to the trial court, the Court of Appeal believed Furry’s time estimates would be sufficient to calculate overtime due:

“[W]here the employer has failed to keep records required by statute, the consequences for such failure should fall on the employer, not the employee. In such a situation, imprecise evidence by the employee can provide a sufficient basis for damages.” (Hernandez, supra, 199 Cal.App.3d at p. 727.) “ ‘[A]n employee has carried out his 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. The burden then 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. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate.’ ” (Ibid., citing Anderson v. Mt. Clemens Pottery Co. (1945) 328 U.S. 680, 687–688 (Mt. Clemens Pottery).)  * * * * 

“Once an employee shows that he performed work for which he was not paid, the fact of damage is certain; the only uncertainty is the amount of damage.  …”  * * * *  That Furry had to draw his time estimates from memory was no basis to completely deny him relief. In Hernandez, the employee testified based on his recollection that he was required to be on his employers’ premises from 8:00 a.m. until 9:00 p.m. or during the store’s regular hours. (Hernandez, supra, 199 Cal.App.3d at pp. 727–728; see Wirtz v. Dix Box Co. (9th Cir. 1963) 322 F.2d 499, 500–501 [allowing employees to estimate average hourly earnings from piecework to supply information missing from employer’s records].) It was the employee’s memory that satisfied the initial burden, shifting the onus to the employer to either provide a specific detail on the amount of overtime or to disprove by evidence what was not correct with the employee’s figures. That does not appear to have happened here. 

So, this means that employers who do not keep adequate time records may be subjected to liability based on the employee’s estimated hours worked.  The employee’s estimates need not be perfect. And the employer has an opportunity to prove the actual hours worked.  Of course, having classified Furry as exempt, East Bay likely would not have seen the need to keep time records for Furry.  Hence, the danger of misclassification. 

Meal Periods

The Court of Appeal also addressed Furry’s claim that East Bay did not pay him for missed meal periods, including for the time worked as well as the premiums for non-compliant meal breaks.

Furry admitted that he knew he had the opportunity to take meal breaks in compliance with state law.  However, he argued that the Company knew he was eating at his desk and, therefore, he was not “duty free.”

The Court noted that if Furry worked through provided meal periods, at most he would be due the “straight time” for the hours worked, but only if the Company ‘knew or reasonably should have known that the worker was working through the authorized meal period.’ ” (Brinker, supra, 53 Cal.4th at p. 1040, fn. 19.) 

The Court also found that Furry did not prove that the Company “knew or should have known” he was working through meal breaks.  Merely because he ate at his desk by his own choice was not dispositive proof of a non-compliant meal break.  So, no pay was due for Furry’s time allegedly worked during meal breaks. 

To defeat meal period claims, it is important to ensure the meal period policy fully “provides” the opportunity to take meal periods.  To avoid arguments that an employee worked through a meal and that the Company knew about it, it is best to require employees to leave the work area, invite employees to report missed meals, and ensure management never instructs employees to work through a meal period without paying the premium due.  There’s more to it, but the blog is not legal advice, etc.





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