Williams HR Law LLP

THE IMPORTANCE OF GOOD RECORDKEEPING: EMPLOYER’S DAMAGES FOR HOURS NOT WORKED OVERTURNED

August 30, 2023

In Trejo v Pro-Align Heavy Suspensions Ltd. [Trejo], an employer sought damages from a former employee for payment of wages for work that the employee allegedly did not perform. The Supreme Court of British Columba (“BCSC”) held that the trial judge’s reliance on a spreadsheet of the employee’s hours of work—created by the employer long after the employee resigned—was an overriding error. As a result, the BCSC overturned the employer’s damage award.

Background

The employee began working for the employer in August 2017 as an Office Administrator, Bookkeeper, and Controller. Although the employee did not have a written employment agreement at the start of her employment, an employment agreement was subsequently drafted signed by the employee in October 2017. Under the terms of her written employment agreement, the employee was not required to log in or out of work each day, nor was she required to keep a time sheet of her hours worked. Additionally, the employee’s work schedule was flexible, and she often worked remotely.

In October 2018, the employee went on a medical leave of absence and never returned to work. Months after the employee left work, the employer filed a small claims action seeking damages for the payment of wages for 801.24 hours of work that the employee allegedly never performed.

In asserting its position, the employer relied on a spreadsheet that was created in 2019, over a year after the employee’s departure. The spreadsheet included information about the employee’s work hours, and only included information obtained from one of the three software programs used by the employee while she worked for the employer. The individual who created the spreadsheet was not actively involved with the employer during the employee’s period of employment.

The employee subsequently filed a counterclaim against the employer for two months of unpaid wages at the beginning of her employment.

The trial judge for the small claims action ruled in favour of the employer and held that the employee was paid for more than 400 hours of work which she never performed. The trial judge relied significantly on the spreadsheet created by the employer, despite stating that the spreadsheet was “not completely reliable” and inaccurately represented the employee’s hours of work.

With respect to the employee’s counterclaim, the trial judge found the employer did not pay the employee during the first two months of her employment when she had no formal written employment agreement; therefore, the employee was entitled to her two months of unpaid wages.

The employee appealed the trial judge’s decision to the BCSC.

BCSC Decision

The BCSC determined that the trial judge made an overriding error of fact in finding that the employee did not perform more than 400 hours of work, as the trial judge relied on an inaccurate spreadsheet created by the employer.

In outlining its reasons, the BCSC emphasized the following limitations with respect to the spreadsheet:

  1. The individual who created the spreadsheet had no direct knowledge of the hours that the employee worked or did not work, because he was not actively involved with the employer during the employee’s period of employment;
  2. The spreadsheet was created 18 months “after the fact”, referring to the date of the employee’s departure;
  3. The spreadsheet was incomplete, because it only included data from one of the three software programs that the employee used during her employment; and
  4. The employee was not required to log her time on the software as a condition of her employment.

The BCSC further noted that another record that was contemporaneously created by the employer included data which directly contradicted the data in the spreadsheet and indicated that the employee did in fact work for some of the hours, contrary to what was set out in the spreadsheet. Specifically, the document that was created contemporaneously showed that the employee did perform work-related tasks on 16 of the 29 days that the trial judge had erroneously found the employee did not perform work, based on the weight of their reliance of the data in the spreadsheet.

The BCSC ultimately set aside the trial judge’s finding regarding the employer’s claim against the employee and upheld the employee’s claim for unpaid wages during the two months of work before she signed her written employment agreement.

Key Takeaways

The Trejo decision provides valuable insight for employers regarding the importance of contemporaneously monitoring the work activity of employees, including contemporaneously documenting and, if necessary, correcting employees’ hours of work. This practice will help to avoid disputes about hours and to minimize liability in the context of litigation.

Employers should consider implementing the following best practices with respect to employee hours:

  1. Draft an Express Term: If employers want to rely on a system that requires their employees to punch in and out, employers should consider drafting this requirement as an express term in their employment agreement /policies.
  2. Capture Accurate Information: Employers should ensure that information related to employee hours is accurately recorded. Often, this can be achieved by assigning responsibilities related to verification of time worked to employees’ direct managers or supervisors.
  3. Take Contemporaneous Notes: It is crucial for employers to take contemporaneous notes of any employee issues as they arise, including notes of any discussions with the employee about issues with their hours. As best practice, notes should be taken on the same day that the discussion or incident occurred.
  4. Maintain a Record of Ongoing Communications and Documents: Employers should ensure they maintain an ongoing record to be kept in the employee’s file. This practice will ensure that any pattern of behaviour or conduct is reflected in the documentation.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.

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