by Maggie Spell

When employees work on client jobsites or at remote locations, it may be tempting to pay them based on their scheduled hours instead of tracking their specific hours worked. But if they perform work before or after their scheduled shifts, which includes tasks such as loading and unloading tools, then they need to be paid for the time. A recent decision by the U.S. 5th Circuit Court of Appeals (which covers employers in Louisiana, Mississippi, and Texas) serves as a good reminder of why it’s important to be clear employees must accurately record their hours worked so you can pay them accordingly.

Laying on the Wood

Employees in the construction department of Five Star Automatic Fire Protection, LLC, a fire-sprinkler installation and service company, work in two-man crews with one foreman (sprinkler fitter) and one helper (laborer). The crews typically work at client jobsites. Some are close to the company’s shop where pipe is cut and welded, others are up to an hour away, and several are out of state, requiring crews to stay out of town during the workweek. Occasionally, the crews also work in the shop or at the owner’s ranch.

Generally, Five Star’s construction employees work from 7:00 a.m. to 3:30 p.m. The crews first report to the shop and load the materials needed for the workday, then drive a company truck to the jobsite, and end their day by driving back to the shop to drop off the company vehicle. As hourly employees, they must record their own time by writing on company timesheets how many hours they worked each day. If an employee splits a day between a jobsite and the ranch, he doesn’t record his start and stop time for each location or the order in which he worked at the sites.

Adding the Kindling

The U.S. Department of Labor (DOL) conducted an investigation in which the investigator found the construction employees were owed for uncompensated time before and after their shifts, as well as back pay.

After Five Star declined to pay the back wages the DOL claimed were owed, the agency filed a lawsuit alleging overtime and recordkeeping violations under the Fair Labor Standards Act (FLSA) and seeking back wages and liquidated (double) damages for the employees.

Lighting the Match

The dispute went to trial. The DOL called several former employees to testify about Five Star’s compensation practices. They consistently testified they:

• Were required to report to work no later than 6:45 a.m. for a 7:00 a.m. shift;
• Engaged in compensable work duties before 7:00 a.m.;
• Left their job sites at 3:30 p.m. to drive back to the employer’s facility; and
• Were told by the lead supervisor not to record any pre- or post-shift time.

The judge found Five Star failed to keep accurate records, required employees to arrive at the shop early without compensating them for the 15-minute gap, and failed to pay for the required travel time back to the shop. The court determined the employer was liable to 53 construction employees for $121,687.37 in back wages and an equal amount in liquidated damages (plus a little more for some other violations).

Stoking the Fire

Five Star asked the 5th Circuit to review the decision, but it agreed with the district court judge. Generally speaking, if an employer’s records are “inaccurate or inadequate,” an employee need only show by “just and reasonable inference” she was an employee, worked the hours, and wasn’t paid. The employer then has the opportunity to come forward with proof of the precise amount of work performed or with evidence to call into question the employee’s showing.

Here, the district court judge found Five Star’s “bare-bones timesheets” to have “left numerous evidentiary gaps,” and the 5th Circuit agreed the judge was permitted to fill in those gaps with testimony the employer instructed employees not to record their pre- and postshift work hours.

Five Star offered arguments about its general efforts to correct timesheet errors, the instruction in its manual that employees record all of their time, and its openness to addressing employee concerns. The company’s efforts, however, didn’t undermine the specific testimony employees worked (per company instruction) before and after their recorded hours and didn’t record the extra time. Ultimately, the district court judge’s back pay and liquidated damages awards stood. U.S. Department of Labor v. Five Star Automatic Fire Protection, L.L.C., Case 19-51119 (5th Cir., February 9, 2021).

Extinguishing the Fire Before it Starts

This case serves as a good reminder of the low bar employees have to meet to show they’re entitled to pay for off-the-clock work when the employer’s records aren’t accurate. According to the court, “It’s a lenient standard rooted in the view that an employer shouldn’t benefit from its failure to keep required payroll records, thereby making the best evidence of damages unavailable.”

You are responsible for maintaining records of hours worked, so it’s important to have policies in place that make clear employees are expected to record all time worked and to train management to enforce this expectation, rather than, as here, offering conflicting instructions. If you aren’t sure what your obligations are for timekeeping, compensating employees, and recordkeeping, contact your employment lawyer for advice before you’re engulfed in flames like the employer here.

Maggie Spell is a partner in Jones Walker’s labor relations and employment practice. She can be reached in New Orleans at mspell@joneswalker.com or 504-582-8262.