DOL Can Infer FLSA Damages from Limited Evidence of Hours Worked

By Jeffrey Rhodes July 7, 2020

​In an enforcement lawsuit on behalf of unpaid child workers, the U.S. Department of Labor (DOL) can prove wages owed based on the days and weeks that a plurality of the children claimed to have worked, the 10th U.S. Circuit Court of Appeals ruled.

About 15 years ago, the DOL brought a Fair Labor Standards Act (FLSA) enforcement action alleging that Paragon Contractors Corp., headquartered in Hildale, Utah, and its president, a leader in the Fundamentalist Latter-Day Saints (FLDS) Church, unlawfully employed children to work without pay. In 2007, a federal court blocked Paragon from using oppressive child labor.

According to the DOL, from 2008 until 2012, Paragon entered annual agreements with the Southern Utah Pecan Ranch to harvest pecans on its property. Paragon received 30 percent of the proceeds from the harvest. To complete the harvest, Paragon employed hundreds of children who were members of the FLDS church. The last agreement between the ranch and Paragon ended in 2012, but workers made sworn declarations that children continued to participate in the harvest through 2013.

In 2015, the DOL moved the court to hold Paragon in contempt for violating the 2007 court order, which the district court granted. The court issued a sanctions order directing that Paragon establish a fund to be used by the DOL to administer a claims process for children who performed uncompensated labor. The district court ordered an initial $200,000 payment as a contempt sanction and that Paragon make additional payments into the fund to fulfill all court-approved claims.

Because Paragon did not keep records of the minors' work, the court ordered the DOL to conduct a one-year claims process to determine the amount of back wages. The DOL invited minors who had worked at the ranch to submit a form stating how many days they worked per week and how many weeks they worked per season.

The DOL received 104 eligible forms, many of which were incomplete in key respects. First, 47 forms did not report the days worked per week. Of the 57 claims forms that did, 37 reported six days per week. Second, 21 forms did not report the weeks worked per year. Of the 83 forms that did, 43 reported two and a half to three months. To calculate the proposed wages owed, the DOL used the most frequently reported days and weeks worked—the statistical mode—from the claims forms to supplement the incomplete claims.

Because 37 claims reported a six-day workweek and 43 claims reported numbers between two and a half to three months or more of work per season, the DOL attributed a six-day workweek and 13-week work season to the incomplete claims. The district court accepted this evidence and found that Paragon owed $1,012,960.90 in back wages and ordered it to pay into the fund $812,960.90 less any interest accrued.

Paragon appealed this decision to the 10th Circuit. Because Paragon did not keep any time records, the 10th Circuit ruled that the DOL only needed to present an initial case of improperly uncompensated hours worked and Paragon bore the burden of disproving that evidence. The DOL could satisfy its initial case with representative evidence from a sample of employees.

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The 10th Circuit noted that several witnesses at the contempt hearing, including child workers, testified as to the extent of work performed, and that a CNN video of the ranch showed hundreds of children at work. Witnesses testified that anywhere from 200 to 600 children worked at the ranch, leading to the conclusion that many child workers did not submit a form. Thus, the court found that the DOL met its burden to make an initial case and to estimate the number of hours worked, and affirmed the district court ruling.

Scalia v. Paragon Contractors Corp., 10th Cir., No. 19-4097 (May 1, 2020).

Professional Pointer: The FLSA punishes failure to keep time records by lowering the burden of proof of damages for plaintiffs claiming wages owed. Employers should keep good time records to prevent courts from less rigorously scrutinizing plaintiffs' claims of hours worked.

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.



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