Donovan v. Simmons Petroleum Corp., 82-1425

• Decision Date: 15 November 1983
• Docket Number: No. 82-1425,82-1425
• Citation: 725 F.2d 83
• Parties: 26 Wage & Hour Cas. (BN 936, 99 Lab.Cas. P 34,492 Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. SIMMONS PETROLEUM CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 83

725 F.2d 83

26 Wage & Hour Cas. (BN 936, 99 Lab.Cas. P 34,492

Raymond J. DONOVAN, Secretary of Labor, United States

Department of Labor, Plaintiff-Appellee, v. SIMMONS PETROLEUM CORPORATION, Defendant-Appellant.

No. 82-1425.

United States Court of Appeals, Tenth Circuit.

Nov. 15, 1983.

Robert W. Harris of Harris & Hills and James W. Dahl of Kansas City, Kan., for defendant-appellant.

T. Timothy Ryan, Jr., Sol. of Labor, Beate Bloch, Associate Sol., Ruth E. Peters, Counsel, Washington, D.C., for Appellate Litigation; Ellen C. Segal, Atty., Dept. of Labor, Washington, D.C., and Tedrick A. Housh, Regional Sol., Kansas City, Mo., for plaintiff-appellee.

Before McKAY, LOGAN and SEYMOUR, Circuit Judges.

McKAY, Circuit Judge.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. See Fed.R.App.P. 34(a); 10th Cir.R. 10(e). The cause is therefore ordered submitted without oral argument.

The Secretary of Labor brought this action against Simmons Petroleum Corporation (Employer), alleging violation of minimum wage, overtime and recordkeeping provisions of the Fair Labor Standards Act of 1938 (the Act). 29 U.S.C. Secs. 201-19 (1976 & Supp. V 1981), specifically, 29 U.S.C. Secs. 206, 207, and 211(c). The Employer owned and operated six gasoline service stations in Kansas and Missouri. The trial court found that from November 1, 1975, until November 1979, the Employer deducted cash register shortages and the amount of uncollectible checks accepted by its employees from the paychecks of employees who were on duty when the shortages occurred. These deductions resulted in the employees being compensated below the minimum wage set by section 206 of the Act. Further, the Employer did not pay employees one and one-half times their regular pay rates for work in excess of forty hours per week. The Employer did not compensate employees for time worked before or after scheduled shift hours to operate the stations and complete bookwork. Although the Employer kept payroll records, the records reflected neither the cash register shortage deductions nor the uncompensated hours.

The trial court found that these actions violated the minimum wage, overtime and recordkeeping provisions of the Act, and ordered the Employer to compensate former employees for shortages. The amount of compensation was based on the court's revision of formulae developed by the plaintiff's compliance officer who investigated the violations.

On appeal, the Employer challenges the trial court's (1) finding of willfulness and the corresponding extension of the statute of limitations from two to three years and (2) use of the formulae.

Title 29 U.S.C. Sec. 255(a) provides for extending the statute of limitations for prosecution of minimum wage and uncompensated overtime violations from two to three years if the violations were willful. ¹ Accordingly, upon finding that the Employer's violations were willful, the trial court extended the statute of limitations. In 1976, the Employer was investigated for deducting cash register shortages from employee paychecks and paid $800 in settlement. The Employer argues that its actions prior to the 1976 investigation could not have been willful because it was not informed of violations until that investigation took place. Further, the Employer claims, the 1976 investigation was concerned only with minimum wage violations, not with uncompensated time violations and therefore even after 1976, its actions could not have been willful with respect to the uncompensated time charge because that infraction was unknown.

A violation may be willful even if an employer does not have specific knowledge that his actions violate the Act. Donovan v. Williams Oil Co., 717 F.2d 503 at 505 (10th Cir.1983). Instead, "[a] violation is willful when the employer was, or should have been, cognizant of an appreciable possibility that the employees involved were covered by the statutory provisions." E.E.O.C. v. Central Kansas Medical Center, 705 F.2d 1270, 1274 (10th Cir.1983). It is enough that an employer knew that the Act was "in the picture." Mistretta v. Sandia Corp., 639 F.2d 588, 595 (10th Cir.1980) (citing Coleman v. Jiffy June Farms, 458 F.2d 1139, 1142 (5th Cir.1972)). Applying this standard in light of the size and complexity of the Employer's operation, as well as the Employer's bookkeeping practices, the trial court did not err in finding that the Employer was at least generally aware of the law's requirements and therefore the violations were willful.

The Employer challenges the use of the formulae on the grounds that the testimony offered by the plaintiff was not representative of all the stations involved and was not definite enough to accurately determine the cash register shortages and uncompensated time.

The employee bears the burden of proving he performed work for which he was not properly compensated. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687, 66 S.Ct. 1187, 1192, 90 L.Ed. 1515 (1946). However, employers have a duty to keep accurate records. If employers do not keep accurate records the employee's burden is extremely difficult. In order to prevent the employee from being penalized by the employer's failure to keep adequate records, the Supreme Court held in Anderson that an employee carries his burden by proving that he has "in fact performed work for which he was improperly compensated and ... [producing] sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference." Id. Upon such a showing, the burden shifts to the employer to produce evidence of the precise amount of work performed or to negate the reasonableness of the inference drawn from the employee's evidence. If the employer does not rebut the employee's evidence, then damages may be awarded even though the result is only approximate. The employer cannot complain that the damages lack the precision that would have been possible if the employer had kept the records required by law. Id. at 687-88, 66 S.Ct. at 1192.

The plaintiff in the instant case produced testimony of twelve former employees. This testimony was supported by that of the compliance officer, ² as well as documentary evidence. While not every employee testified, at least one employee from every station testified or was deposed. Not all injured employees need testify in order to establish a prima facie case as a matter of "just and reasonable inference." Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 472 (11th Cir.1982); Brennan v. General Motors Acceptance Corp., 482 F.2d 825, 829 (5th Cir.1973). The plaintiff's evidence was sufficient to establish a pattern of violations, thereby causing the...