Preserve records or face jury’s wrath on overtime pay

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in Employment Law,Human Resources,Leaders & Managers,Management Training

If you get wind of a possible lawsuit over unpaid overtime, make sure all your payroll records remain intact and available. Don’t crank up the shredder. If you dispose of related documents, the penalties under Ohio law can be especially harsh.

When a court can’t easily figure out how much back-overtime pay you owe an employee, state law allows a jury to decide the financial penalty. That same rule applies to every employment-related lawsuit, so you should preserve any records dealing with litigation.

Under Ohio law, employees can collect damages if:

  • The employer knows about pending or probable litigation.
  • The employer willfully destroys any evidence related to litigation with the intent to disrupt a lawsuit.
  • Destruction of the evidence actually hinders the later lawsuit.

Recent case: Two Akron city employees complained to management that they were due overtime pay. Instead, the city allowed them to take comp time off. When the city dropped its comp-time program, the two again made noise about a lawsuit.

Soon after, a new payroll clerk disposed of the records that showed how many comp-time hours employees had accumulated. The clerk claimed she threw out the files because the city eliminated comp time. But the judge was suspicious because managers hadn’t punished the clerk for breaking company rules against destroying pay records.

The jury didn’t believe her either and found the city responsible. It awarded the two employees more than $860,000 even though they could only prove the city owed them about $1,000 in overtime pay. (Kish, Elder v. City of Akron, No. 02-3631/3632, 6th Cir., 2006)

Final tip: Also, warn managers not to squelch overtime gripes. That would rile the National Labor Relations Board, which recently ruled that employers can’t gag employees’ discussions about pay practices.

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