App Provides Reminder to Ensure Recordkeeping Is in Order

With an emphasis on practical strategies to improve productivity and performance, and limit potential liabilities, Bulletin to Management™ concisely analyzes new developments in employment and human resources management.

By James M. Coleman

James M. Coleman is a managing partner with the national labor and employment law firm of Constangy, Brooks & Smith LLP, and co-chair of the firm's Wage & Hour Practice Group.

The next time you see your employees entering data on an iPhone, be thankful if they're only texting their friends.

Instead, your employees may be creating their own records of the hours that they will claim they worked. On May 9, 2011, DOL's Wage and Hour Division (WHD) announced its first “smartphone application” (62 BTM 155, 5/17/11). Although the current version works only with the iPhone and the iPod Touch, DOL promises updated versions that will work on Blackberry and Android-based smartphones, as well as updated functionality that will allow for the tracking of more extensive data, including tip income, commissions, bonuses, deductions from pay, holiday pay, shift differentials, and paid time off.

For now, the free app provides users with an electronic timesheet, which DOL says will help employees to independently track the hours they work. Once the employee's hourly wage is entered, the app automatically calculates the gross wages that are due based on the data entered. It can also track breaks and overtime. The app is currently available in both English and Spanish.

The DOL is touting its app as a significant technological advance because “instead of relying on their employers' records, workers now can keep their own records. This information could prove invaluable during a WHD investigation when an employer has failed to maintain accurate employment records.” DOL is not saying whether it will consider the employer's records to be inaccurate merely because the employee's own records may differ.

Although it has received a lot of attention, many believe that the timekeeping app is more of a gimmick and an effort at public relations, than anything else. Employees have always been free to create their own records of hours worked, whether using pencil and paper, a calendar, an old-fashioned Palm Pilot, or stone tablets, for that matter. In the end, the app does not allow an employee to do anything that she couldn't have done before, albeit by less technologically advanced means.

Also, one wonders how many workers who might use an app like this can afford to own an iPhone or iPod Touch, or the associated monthly data charges.

That said, the app has certain advantages, including the automatic calculation of gross pay, and the ability to e-mail the data–perhaps to the employee's lawyer or the WHD. And it certainly provides employers with an incentive to make sure wage and hour recordkeeping is in order.

Recordkeeping Obligations

The federal statute that is implicated by the app is the Fair Labor Standards Act , as amended, 29 U.S.C. § 201, et seq. (FLSA). The FLSA requires employers to maintain accurate records of hours worked by nonexempt employees, and failure to maintain records is a violation of the FLSA in itself, even if the employer complies with its minimum wage and overtime obligations.

But frequently, the failure to maintain adequate records is also used against the employer to prove that it committed substantive violations of the FLSA's minimum wage or overtime requirements. Where the plaintiffs are “exempt” employees who contend that they should be treated as nonexempt, the employer will usually have no records of hours worked because exempt employees are excluded from the part of the FLSA's recordkeeping rules that mandate records of hours worked.

Courts use a burden-shifting analysis in order to establish the hours worked for which minimum wage or overtime compensation is due. The plaintiffs have the initial burden of proof to establish that they performed work for which they were not properly compensated under the FLSA. When the employer has maintained no records of hours worked—perhaps because it had been treating the plaintiffs as exempt, or because the records that do exist are inaccurate or unreliable—the plaintiffs can easily satisfy their initial burden of proof. All they have to do is produce sufficient evidence to show the amount and extent of that uncompensated work as a matter of just and reasonable inference. Once this inference is established to the satisfaction of the court, the burden is then placed on the employer to come forward with evidence of the precise amount of work performed or with evidence that negates the reasonableness of the inference established by the plaintiffs.

It will be interesting to see what the courts will do with employee time records that were maintained via the new app. Presumably, “app records” will be given the same weight as any other employee record of hours worked. However, it will take some time before “FLSApp cases” make their way through the court system.

We expect to see more quickly how WHD will respond to FLSA complaints that are supported by records created via the new app. Employers may be hearing soon from WHD investigators with questions about why the employer's time records differ from employee records created via the new app. Presumably, some variation between the competing sets of records is to be expected, but if the differences are significant, it will be interesting to see which set of records DOL will be more likely to accept.