Appeal from the Circuit Court of of De Kalb County; the Hon.
John A. Leifheit, Judge, presiding.
JUSTICE STROUSE DELIVERED THE OPINION OF THE COURT:
This action was brought to recover damages for defendant's alleged failure to pay federally mandated minimum wages. The trial court, after a bench trial, entered judgment for the plaintiff in the amount of $5,296.44 plus costs. Plaintiff timely appealed and defendant cross-appealed, both challenging the amount of the award.
Plaintiff was employed as a busboy by defendant's restaurant, the Junction Eating Place, in DeKalb. He worked there from August 25, 1980, through January 10, 1982, and then again from April 5, 1982, through July 10, 1983.
After being terminated by defendant, plaintiff filed a two-count complaint. Count I sought damages under the Minimum Wage Law (Ill. Rev. Stat. 1981, ch. 48, par. 1001 et seq.). Count II sought damages under the Fair Labor Standards Act of 1938, as amended (FLSA or Act) (29 U.S.C.A. sec. 201 et seq. (West 1978)). Plaintiff prayed for an order of the court demanding an accounting of the defendant, an equal amount as liquidated damages, prejudgment interest, court costs, and reasonable attorney fees.
The parties agree that their employment agreement was sketchy and consisted of the following terms: $300 every two weeks, $40 in tips every two weeks, and two meal breaks per day. At trial, plaintiff testified that he regularly worked from 7 a.m. until 5 p.m. seven days a week, for a total of 70 hours per week, and that he took one half-hour meal break each day. Plaintiff stated that he "would eat one meal, maybe two, maybe not at all because it would depend on how busy that we were" and that the meal breaks he did take were 20 to 25 minutes long. On cross-examination, plaintiff admitted that if "everybody was slowed down" he would then take a break of 30 to 35 minutes. Therefore, according to his calculations, he worked 66 1/2 hours each week.
Angelo Tsagalis, an officer and managing agent of defendant, testified that plaintiff took two 45-minute meal breaks daily and that plaintiff only worked a total of 8 1/2 hours per day, or 59 1/2 hours a week. Gus Bahramis, another officer of the corporation, indicated that he knew that plaintiff took two 45-minute meal breaks per day. He admitted on cross-examination, however, that he did not come to work until 6:30 or 7 p.m. and worked a shift which plaintiff did not work.
Plaintiff claimed that he should be compensated for approximately 136 weeks. His complaint sought damages for defendant's violations of the Act which dated back to September 16, 1980. Having filed this action on September 16, 1983, plaintiff contended that in spite of the two-year statute of limitations, a three-year period of recovery is proper under the statute since the defendant's violations were wilful. Defendant argued that its acts were not wilful under the Act and that the two-year limitation should apply.
Employers are allowed, under the Act, to include the reasonable cost of meals provided to an employee as a component in satisfying his wage obligations owed to that employee. Defendant did not keep any written records of the number of meals plaintiff ate, the time of such meals, what plaintiff ate, or the reasonable cost of such meals. Plaintiff testified that he ate, on the average, one meal per day. Defendant testified that he estimated the retail value of the meals provided to the plaintiff at $10 or $11 per meal. The only evidence concerning meal value appears on plaintiff's paycheck stubs. Each biweekly check stub shows a block with the designation "M" and the number "10" within. Angelo Tsagalis testified that this notation was only for tax purposes and was not a correct indication of the value of the meals actually eaten by plaintiff.
Defendant also sought credit for lodging provided to the plaintiff. He claimed he expended $6,289.99 on an apartment in which he housed plaintiff. Plaintiff contended defendant should receive no credit since (1) this arrangement was not agreed to in their employment agreement; (2) the records which supported this were nonexistent; (3) the occupancy of the apartment was irregular; (4) the amount which defendant claims includes figures for months when plaintiff did not work for defendant; and (5) plaintiff contributed from his own funds to pay for this housing. It is undisputed that plaintiff did, at various times, live in an apartment provided by defendant. However, defendant kept no records of who lived in the apartments or how many people lived there at any particular time. Finally, plaintiff and defendant never had any agreement concerning housing or a figure for its cost.
Defendant also sought credit for tips which plaintiff earned at defendant's restaurant. Plaintiff resisted by claiming that (1) he was never notified when he and defendant created their employment agreement that tips were to be credited to minimum wages, and (2) defendant's failure to keep accurate records of plaintiff's tips precludes defendant from now claiming them toward his minimum-wage obligations. Plaintiff admits receiving from defendant, on occasion, a portion of the tips pooled by the waitresses, but the amount of the tips is in dispute. Defendant testified that from August 1980 until late in 1982, he kept plaintiff's tips to pay for housing but kept no records of any tips received or the amount received. Plaintiff's yearly W-2 statements did not reflect any income from tips in the appropriate blank.
On May 31, 1985, the trial court issued its order. The court found, inter alia, that (1) the two-year statute of limitations was applicable; (2) that plaintiff was not entitled to liquidated damages because the defendant met its burden by showing that its acts or omissions were in good faith and that it had reasonable grounds for believing that it was not in violation of the FLSA; (3) that defendant was not entitled to any credit for the tips received by plaintiff; (4) that defendant was not entitled to any credit for lodging paid on behalf of plaintiff; (5) that plaintiff received one hour per day as a lunch break; (6) that defendant was entitled to a meal credit in the amount of $6 per day; and (7) that plaintiff should be awarded the sum of $5,296.44 (which was based on a 56-hour work week) plus costs. The court denied plaintiff's claim for prejudgment interest and attorney fees.
On June 6, 1985, plaintiff filed his notice of appeal. Defendant cross-appealed on June 10, 1985, seeking to vacate the order entered by the trial court and enter judgment for defendant or, in the alternative, to reverse the judgment and remand the cause with directions for a new trial.
• 1 Plaintiff argues that the result of the trial court is against the manifest weight of the evidence. He first attacks the finding of the court that he worked only nine hours per day. He claims that since defendant failed to keep the appropriate records, the court should have found that his testimony of his work times and lunch breaks was conclusive. We disagree. Section 211(c) of the Act (29 U.S.C.A. sec. 211(c) (West 1965)), requires the employer to keep various records concerning an employee's employment. (See Brennan v. Valley Towing Co. (9th Cir. 1975), 515 F.2d 100, 111.) Section 516.2 of the Code of Federal Regulations (the regulations) (29 C.F.R. sec. 516.2 (1981)), promulgated pursuant to the Act, requires the employer to record, among other items, the time on which the employee's workday begins and the hours worked each day and the total hours worked each workweek. By estimating, rather than keeping accurate records of hours worked, the defendant violated record-keeping requirements. Williams v. Tri-County Growers, Inc. (3d Cir. 1984), 747 F.2d 121, 128.
When a defendant fails to keep proper records, the plaintiff can prove his case by testimony sufficient to show the amount and extent of his work as a matter of just and reasonable inference. In Anderson v. Mt. Clemens Pottery Co. (1946), 328 U.S. 680, 90 L.Ed. 1515, 66 S.Ct. 1187, the Supreme Court faced the situation of an employee's inability to meet his burden of proof regarding the specific number of hours worked because the employer had kept little or no records. The court stated that normally the employee has the burden of proving that he performed work for which he was not properly compensated. However, when the employer keeps inadequate records, the employee need only introduce "sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference." (328 U.S. 680, 687, 90 L.Ed. 1515, 1523, 66 S.Ct. 1187, 1192.) The court explained:
"When the employer has kept proper and accurate records the employee may easily discharge his burden by securing the production of those records. But where the employer's records are inaccurate or inadequate and the employee cannot offer convincing substitutes a more difficult problem arises. The solution, however, is not to penalize the employee by denying him any recovery on the ground that he is unable to prove the precise extent of uncompensated work. Such a result would place a premium on an employer's failure to keep proper records in conformity with his statutory duty; it would allow the employer to keep the benefits of an employee's labors without paying due compensation as contemplated by the Fair Labor Standards Act. In such a situation we hold that an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference to be drawn from the employee's evidence. If the employer fails to produce such evidence, the court may then award damages to the employee, even though the result be only approximate." (328 U.S. 680, 687-88, 90 L.Ed. 1515, 1523, 66 S.Ct. 1187, 1192.)
The regulations require employers to keep a primary set of records, which should include, inter alia, the "[h]ours worked each workday" (29 C.F.R. sec. 516.2(a)(7) (1981)), and supplementary records, which should include the "daily starting and stopping time of individual employees." (29 C.F.R. sec. 516.6(a)(1) (1981)). It is undisputed that defendant did not keep such records. Therefore, plaintiff was entitled to produce sufficient evidence to show the extent and amount of such work as a matter of just and reasonable inference. (See Williams v. Tri-County Growers, Inc. (3d Cir. 1984), 747 F.2d 121; Wirtz v. Lieb (10th Cir. 1966), 366 F.2d 412.) The only evidence introduced on this matter was plaintiff's testimony that he would take one meal break per day of no more than one-half hour. In Williams v. Tri-County Growers, Inc. (3d Cir. 1984), 747 F.2d 121, the testimony of the plaintiffs (migrant workers and their crew leader) was found sufficient to support a reasonable inference of hours worked and was sufficient to shift the burden to Tri-County to negate the inference. The court noted that the testimony of plaintiffs can be sufficient to satisfy the burden Anderson imposes on the employees. (See also Marshall v. VanMatre (8th Cir. 1980), 634 F.2d 1115, 1119; Mitchell v. Williams (8th Cir. 1969), 420 F.2d 67, 70-71.) This, however, does not dispose of the issue. Plaintiff's evidence does not create an unrebuttable presumption. The defendant is entitled to present testimony which may overcome plaintiff's evidence. In Marshall v. Truman Arnold Distributing Co. (8th Cir. 1981), 640 F.2d 906, the court found that the Secretary of Labor had presented sufficient evidence to meet the employee's initial burden but that the company substantially rebutted the evidence. It awarded less than half of the amount claimed. 640 F.2d 906, 911.
• 2 In its order of May 31, 1985, the trial court stated that "while the evidence presented is in dispute as to the amount of time for meal breaks during the working day, the Court finds that the plaintiff received one hour per day as a lunch break." We find that the trial court's decision was not manifestly erroneous.
• 3 Next, defendant contends that he presented sufficient evidence to establish an entitlement to a lodging and utility credit in the amount of $6,289.99. The regulations provide that the reasonable cost of lodging and other facilities may be considered as part of the wages paid to an employee where customarily furnished to him. 29 C.F.R. secs. 531.30, 531.31, 531.32 (1981).
Defendant relies on Marshall v. Truman Arnold Distributing Co. (8th Cir. 1981), 640 F.2d 906, and Lopez v. Rodriguez (D.C. Cir. 1981), 668 F.2d 1376, which, he claims, support his position. In Truman Arnold Distribution Co., the employer presented evidence to establish that it was providing a rent-free apartment to four employees who worked at its 24-hour gasoline station. The trial court granted defendant a $300 monthly credit. In Lopez, the court found that the trial court erred in denying the defendant employers any credit for board and lodging furnished to their Spanish-speaking live-in house-keeper. The court found ...