DIRECT AND INDIRECT DAMAGES: WHAT IS THE DIFFERENCE?

By: Andrew Richards, Co-Managing Partner(LI), Kaufman Dolowich Voluck,
Attorneys at Law General Counsel, Subcontractors Trade Association

Andrew Richards
Co-Managing Partner (LI)
Kaufman Dolowich Voluck,
Attorneys at Law General Counsel
Subcontractors Trade Association

Contractors have many ways of keeping labor records.  Some have the old school method of having laborers fill out individual daily and/or weekly timesheets; some have each laborer advising a foreman of the time worked at a particular project and then the foreman fills out the weekly time sheets, and some have computerized record keeping where the laborer uploads the time spent and project location to a central database.

Others have hybrid systems where labor records are kept which may include both timesheets and computerized records.  The evidentiary issue at trial is which labor records are admissible as business records.  For example, there are contractors who keep a job cost report which includes all job costs including labor costs.  These reports do not generally show each day the laborer worked and which project he/she worked on.  Rather, they show weekly charges all laborers for that particular project.

Can the job cost report be used to prove labor costs for that project?  One would argue since the job cost report is kept by the company for each project, and it was kept in the same manner that all other job cost reports are kept, that it satisfies the business record exception to the hearsay rule.

A judge may or may not agree depending on where the information came (i.e., the source document) from that is contained in the job cost report.  If the information is gathered by the home office based on oral reporting, it just might be admissible.  But if the information came from another source document such as a weekly time sheet, it may not.  That is because the source document was the weekly time sheet.

In order to have the job cost report admitted into evidence, the judge may require that the weekly time sheets be marked as an exhibit and admitted into evidence.  If the contractor does not have the weekly time sheets, the contractor may not be able to get any document admitted into evidence to prove labor costs.  It is critical that contractors keep and retain all labor records for litigation whether they are paper records or electronic records so that labor costs may be proven at trial.  Discarding the original labor records whether in paper or electronic form may preclude the contractor from proving labor costs at trial.

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