An Atlanta wrecker and towing service found itself in court after two drivers accused it of illegally failing to pay them the overtime compensation they were properly due under the Fair Labor Standards Act. The court’s summary judgment ruling in the case includes vital lessons for employers when it comes to the importance of maintaining clear and thorough pay records, as well as the risks involved in handing off FLSA compliance to a third party. If you’re facing an unpaid overtime claim (or pursuing one,) representation from a knowledgeable Atlanta wage and hour lawyer can be essential to your success.
The drivers typically worked 4-5 12-hour shifts each week. The employer paid its driver a straight commission weekly that was “calculated as a percentage of the total revenue they derived from the tows they performed that week.” For one driver that percentage was 30%, for the other it was 35%.
As noted above keeping clear, understandable, and accurate time and pay records for all employees can be crucial to any business.
In the tow truck case, the drivers’ pay records consisted of the employer’s “handwritten logbooks that list each towing job the Plaintiffs performed, and the date and time of the tow.” Those records included “two hourly rates, one with an hour quantity of ’40,’ and one with an hour quantity of ’20.’”
The records were not compelling, according to the court. The judge stated that “the Court cannot determine with any precision from these records the number of hours actually worked. These records show the times that tows were completed, but do not record either the shift times for the drivers or the time spent waiting for towing calls in between tows… This determination is material because, without knowing the number of hours actually worked, the Court cannot calculate and determine whether the Plaintiffs were paid any overtime wages due.”
In other words, more complete records potentially would have allowed the employer to dispose of the drivers’ claims on summary judgment, but the records’ sparseness meant that the issue instead would be litigated at trial.
Possible Risks When Handing off FLSA Compliance to 3rd Parties
Another key element in dispute was whether or not the employer’s alleged violations of the FLSA were willful. Employers should take note of this aspect of the ruling because it spotlights an important area of potential liability exposure.
The towing company retained an accountant who handled all of its payroll. The towing company left the process of ensuring FLSA compliance solely in the hands of that accountant. The employer never asked the accountant if paying its drivers on a straight-commission basis complied with the FLSA and other laws.
Based on those facts, the court said that the drivers could continue litigating whether the employer willfully violated the FLSA.
Demonstrating that you made an “adequate inquiry” into whether or not your practices were compliant with the FLSA can be essential to defeating a claim of a willful violation. Under the facts presented by these parties, the employer’s complete delegation of FLSA compliance to the accountant, combined with its failure to ask questions regarding whether or not its straight-commission practices satisfied the law’s requirements, potentially amounted to, instead of reasonable inquiry, “reckless disregard” of FLSA obligations.
A finding of a willful violation can make a massive difference. One reason regards statutes of limitations. When the case against an employer involves a willful FLSA violation, the law may give workers three years to seek compensation. Otherwise, the workers generally have only two years.
In the case of these tow truck drivers, the difference between three years and two was huge. One driver worked for the employer in 2019; the other from early 2019 to 2021. Because the drivers filed their lawsuit in the summer of 2021, enforcement of a two-year statute of limitations would wipe out the entirety of the former driver’s claim, and a significant fraction of the latter driver’s case (the period spanning from March 2019 to August 2019.)
The law imposes upon you, as an employer, substantial responsibilities when it comes to ensuring that you’re 100% compliant with all the FLSA’s requirements. Whether you’re seeking to ensure that you’re in compliance or you’re facing an unpaid overtime claim, get in touch with the experienced Atlanta wage and hour attorneys at the law firm of Parks, Chesin & Walbert. Our team can provide you with the clear, understandable, and effective advice you need. Contact us through this website or at 404-873-8048 to schedule a consultation today.