More on Amaral v. Cintas: in wage & hour class actions, burdens of proof are appropriately shifted to employers when records are nonexistent

As promised in this earlier post, Amaral v. Cintas (June 11, 2008) ___ Cal.Rptr.3d ___ deserves more commentary.  By way of background, Amaral concerns a living wage ordance (LWO) passed by the City of Hayward.  The LWO requires any company contracting with the City of Hayward to pay specified hourly wages to "any individual employed by a service contractor on or under the authority of any contract for services with the City. . . ."  (Slip op., at p. 19.)  On appeal, Cintas complained that the trial court erred in shifting the burden to require Cintas to prove which of its employees worked on the City of Hayward contracts in order to limit the scope of the class, certified by the trial court and defined as "all production and stockroom workers employed by Cintas at its facilities in Union City and San Leandro between July 1, 1999 and June 30, 2003."  (Slip op., at p. 5.)  The Court of Appeal held wage & hour class actions constitute a special, limited circumstance in which the burden of proof does not rest with the party that must establish the elements of a claim or defense:

“In general, “[e]xcept as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.”  (Evid. Code, § 500.)  On occasion, however, courts may alter the normal allocation of the burden of proof.  (National Council Against Health Fraud, Inc. v. King Bio Pharmaceuticals, Inc. (2003) 107 Cal.App.4th 1336, 1346; see, e.g., Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1670 [burden of proof on issue of causation will be shifted to the defendant when circumstances make it impossible for the plaintiff to prove its case].)  “ ‘In determining whether the normal allocation of the burden of proof should be altered, the courts consider a number of factors:  the knowledge of the parties concerning the particular fact, the availability of the evidence to the parties, the most desirable result in terms of public policy in the absence of proof of the particular fact, and the probability of the existence or nonexistence of the fact.’  [Citation.]”  (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 660-661.)

One long-standing application of burden-shifting occurs in the wage-and-hour context when an employer’s compensation records are so incomplete or inaccurate that an employee cannot prove his or her damages.  When the United States Supreme Court addressed this problem with regard to claims under the Fair Labor Standards Act of 1938 (29 U.S.C. § 201 et seq.), it observed that the remedial nature of the statute and public policy “militate against making [the evidentiary burden] an impossible hurdle for the employee.”  (Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, 687 (Anderson).)  Considering that an employer has a statutory duty to maintain proper records of wages, hours and work conditions and is in the best position to know salient facts about the nature and amount of work performed, the court concluded it is appropriate to shift the burden of proof to the employer.  (Id. at pp. 687-688.)  Specifically, once an employee proves he or she “has in fact performed work” that was improperly compensated, and presents enough evidence to allow an inference as to the amount of this work, the burden shifts to the employer to prove the precise amount of work performed or to negate the inference drawn from the employee’s evidence.  (Ibid.)  The high court observed that applying the normal burden of proof in such circumstances would unfairly penalize an employee for the employer’s failure to keep proper records and would allow the employer to keep the benefits of the employee’s labors without paying full compensation.  (Id. at p. 687.)

Relying on Anderson, California courts have shifted the burden of proof to employers when inadequate records prevent employees from proving their claims for unpaid overtime hours (Hernandez v. Mendoza (1988) 199 Cal.App.3d 721, 726-728) and unpaid meal and rest breaks (Cicairos v. Summit Logistics, Inc. (2005) 133 Cal.App.4th 949, 961-963).  Anderson’s reasoning has also been applied to permit class action plaintiffs to prove their damages for unpaid overtime by the use of statistical sampling.  (Bell v. Farmers Ins. Exchange (2004) 115 Cal.App.4th 715, 746-751.

(Slip op., at pp. 24-25.)  In wage & hour class actions, putative class member employees should use discovery tools at the earliest possible opportunity to ascertain what records do or do not exist.  This should occur before attempting certification so that the Court can be apprised (1) of the availability of common evidence to prove class claims, or (2) the absence of evidence, coupled with a discussion of the burden shift endorsed by Amaral and others.  In order to convice the trial court that a class action is superior, the plaintiff probably needs to explain the manner in which class claims would be established.  If the employer has no records of hours worked, for example, the plaintiff would show evidence of the absence of records, the type of testimony that would be offered to show unpaid hours, and the presumption and burden shift triggered by that evidence.