Wage Theft & Unpaid Wages

California laws require employers to pay all wages due in a timely manner. But many employers fail to do this. If your employer owes you wages, you can recover them even if you haven’t kept careful records of the hours you worked.

Under both California and Federal law, employers are required to keep records regarding the work performed by employees and to provide those records to the employees. But what happens when an employer fails to keep those records and the employees sue for unpaid wages? Courts have recognized that it would be a “perversion of fundamental principles of justice” to deny relief to workers under these circumstances. See Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir. 1986).

For this reason, courts have developed a method for handling wage claims where a defendant has failed to keep proper records. 75 years ago, in Anderson v. Mt. Clemens Pottery Co. 328 U.S. 680, 688 (1945), (1946), superseded by statute on other ground, Portal–to–Portal Act, 61 Stat. 86–87, the United States Supreme Court held that where an employer has failed to keep records required by statute, the consequences for such failure should fall on the employer and not on the employee.

In such a situation, imprecise evidence can provide a sufficient basis for damages:

[W]e hold that an 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.

Anderson, 328 U.S. at 687–688; see also Brock, 790 F.2d at 1447–1448.

California courts use a similar approach. See Romaca v. Meyer 114 Cal.App.2d 375, 384 (1952); Hernandez v. Mendoza 199 Cal.App.3d 721, 726–727 (1988).

In other words, under both California and Federal law, where an employer fails to maintain accurate payroll records, employees carry their burden when they show that they performed work for which they were improperly compensated and produce some evidence to show the amount and extent of that work “as a matter of just and reasonable inference.” Anderson, 328 U.S. at 687; see also Brock v. Seto, 790 F.2d 1446, 1448 (9th Cir.1986); McLaughlin v. Seto, 850 F.2d 586, 589 (9th Cir.1988).

Furthermore, the Ninth Circuit has approved “approximated awards where plaintiffs can establish, to an imperfect degree of certainty, that they ‘have performed work and have not been paid in accordance with the FLSA.’” lvarez v. IBP, Inc., 339 F.3d 894, 914–15 (9th Cir.2003) (internal quotation marks and alterations omitted).) “In such instances, the only uncertainty is the amount of damage, not the fact that damages are due. Where an approximate award based on reasonable inferences forms a satisfactory surrogate for unquantified and unrecorded actual times, an approximated award is permissible.” (Id. (internal quotation marks, citations, and alterations omitted).

For these reasons, proving damages in individual cases is not particularly challenging. The employee can rely upon his or her testimony as to what work they performed and for which they were not paid. The employee can also testify as to what his or her wages should have been. Exact calculations are not required, and approximate amounts should suffice.

When larger groups of employees are involved, both the Ninth Circuit and California courts have permitted district courts to award back wages based upon evidence of damages from a representative sampling of class members. McLaughlin v. Seto, 850 F.2d 586, 589 (9th Cir.1988); Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157, 1189 (2008)(“Anderson’ s reasoning has also been applied to permit class action plaintiffs to prove their damages for unpaid overtime by the use of statistical sampling.”).

Thus, where a worker has established liability for unpaid wages, and that a defendant has failed to maintain accurate payroll records, courts can rely on evidence of a representative sampling of class members regarding the damages owed to establish liability as to the class.