Working Time

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At long last, new USDOL Opinion Letters are bursting forward.  Like Spring.  The agency just issued three new letters on a variety of topics, including one of my favorites, travel time.  The other letters address issues of compensable break time as well as the kinds of lump-sum payments that could be garnished for child support.

writing letter
Copyright: perhapzzz / 123RF Stock Photo

The new Labor Secretary stated early on that the agency was going back to issuing these letters.  I applauded that decision at the time.  These letters reflect the agency’s interpretations of various issues under the FLSA, some of them arcane and off-beat, issues that existing case law does not address.  Under President Obama, the agency ceased issuing opinion letters, but favored so-called Interpretations, which were more global in scope.

I want to focus on the travel time letter, FLSA 2018-18.  The inquiry of the submitter was whether the employer had to pay crane technicians, who worked irregular hours, for their travel time under three scenarios: 1) an employee who travels from his home state on Sunday for a training class commencing at 8AM on Monday; 2) an hourly technician who travels from his home to his work location and then to a job site; and, 3) a worker who travels from job site to job site many times during a single day.

The USDOL response was that the first scenario mandated payment for the employee if his hours of travel cut across their normal workday (which is consistent with the FLSA regulations on this point).   The Letter provided three methods to reasonably determine normal work hours for employees with irregular schedules to determine whether the time was compensable.

The first method involves a review of the worker’s hours during the most recent month of employment so that a final determination could be made on the compensability of the travel time.  The second provides that if typical work hours cannot be determined, the employer may choose the average start and end times for the workday.  Lastly, where there are truly no normal work hours, the employer and employees could negotiate a reasonable amount of time in which travel outside the home communities was compensable.

The Takeaway

I know that plaintiff side lawyers and worker advocates may feel that such letters amount to “get out of jail free” cards employers, who want to avoid liability.  The opposite is the case.  The letters provide guidance so that employers may know how to comply with the law in various situations.   That the following of the guidance in a letter gives the employer the protection of the safe harbor provisions in wage hour law is a justly deserved by product.

Keep writing, Mr. Wage-Hour Administrator…

I blog a lot about working time cases because these are the issues can sneak up on an employer, even the most well intentioned and good faith employer. Travel time is one of these murky, arcane kind of activities that go unnoticed by companies until, often, a lawsuit is filed. Another example emerges. A group of workers who constructed and maintained cellphone towers in several States gave been granted conditional certification in a FLSA collective action based on an alleged failure to pay for travel time. The case is entitled Lichy et al. v. Centerline Communications LLC, and was filed in federal court in the District of Massachusetts.

Silhouette of a cell phone tower shot against the setting sun.The judge certified a class of tower technicians and foremen. These workers can now opt into the lawsuit, which is based on the theory that the company should have compensated them for hours they spent driving company vehicles to work, over supposedly vast distances. The inclusion of foremen in the class, e.g. supervisory personnel, is quite interesting, but the Court found their duties were very similar to the rank-and-file workers and the foremen were working under the identical travel time policy.

The plaintiffs’ lawyer, naturally, applauded the decision, stating “first, the court recognized that slight differences among members of the class do not preclude conditional certification where all class members are subject to the same policy regarding payment of wages  Second, the court explicitly recognized that plaintiffs need not submit affidavits in support of their motion for conditional certification in order to prevail.”

Five tower technicians/lineworkers filed the suit. Their job duties included climbing cell towers, many times in distant locations and installing antennae, radios and cables. The Company mandated that the workers drive together to these job sites. The men were paid their regular hourly rates for the travel time between a meeting point and the job site. However, the Company failed to pay for the travel time returning to the central meeting place unless there were traffic delays or the job location was more than 130 miles from the regional workshop, according to the allegations in the case. The workers seek payment for the time driving back in Company vehicles to the central location. The Company contends that the FLSA does not mandate payment for travel time.

The Takeaway

I wonder why the company would not pay for the travel time back to the meeting place or regional office when the Company did pay for the travel time from the meeting place to the job site. That initial agreement to pay seems to undermine the defense that travel time is non-compensable. Home to work travel time is non-compensable, but when workers must first report to a central location, leave from there to the first job site and travel back to that central location, the travel time then does become compensable.

I bet this case settles…

Working time cases come in all sizes and shapes. Many of these off-the-clock cases are so-called donning-and-duffing cases involving clothes changing for work and whether it is compensable. The U.S. Department of Labor has weighed in again on this issue. It has filed a lawsuit against a battery company for its alleged failure to pay workers for time spent putting on and then taking off protective clothing before and after their shifts. The company is East Penn Manufacturing Company.

Woman with hand raised in hazmat protective suitThe lawsuit alleges that the company owes back wages for almost 7,000 workers. A DOL official stated, “the Department of Labor is committed to ensuring that employees receive the wages they have earned for all the hours they have worked. The legal action in this case demonstrates the department’s commitment to workers and to leveling the playing field for employers that comply with the law.”

The agency claims that the workers spent time putting on protective clothing before commencing a shift and took more time removing the clothing and then showering before they clocked out. Although this was compensable activity under the law, the department said, the company failed to pay employees for that time. Rather, the allegation is that the workers were paid only for their scheduled hours, notwithstanding when they clocked in or out.

The Takeaway

The basic rule is that if the employee cannot perform their main job without first performing or engaging in the preliminary (or postliminary) activity, then the activity is compensable. Here, the workers could not manufacture the batteries if they did not wear the protective clothing. This scenario need not have happened.

At all…

I have blogged several times recently on the rash of “check bag” cases that have percolated through the courts. Another example. A class of workers employed by Converse Inc. have now asked the Ninth Circuit to revive a class action resting on the theory that the time waiting to go through mandatory security inspections was compensable. The employees allege that the trial court’s decision that the time spent was de minimis was incorrect. The case is entitled Chavez v. Converse Inc., and was filed in federal court in the Northern District of California.

White canvas sneakersThe lower court judge found that the waiting time spent in inspections was a minute or a little more. Thus, the Court ruled that the time was de minimis. The employees argued that the judge should not have applied this doctrine to the California Labor Code claims because the test utilized by the Court was ostensibly meant to apply to Fair Labor Standards Act claims under the holding in Lindow v. United States. In this regard, the Court acknowledged that the question of whether the de minimis doctrine could ever apply to the California state statute was a question pending before the California Supreme Court after the Ninth Circuit certified that question to the Supreme Court.

The employees filed suit in July 2015 and in September 2016, Judge Cousins certified a class of approximately 1500 employees, finding that the claims shared commonality sufficient for a class-based litigation. Nevertheless, the judge dismissed the suit because the time spent in waiting was too brief to warrant litigation or to make findings that compensation was owed because the time was “working time.”

There were competing experts in this case. The Company expert stated that the inspection took less than ten seconds. The workers’ expert stated that the inspections took approximately 2.5 minutes per occurrence. The Judge ruled that even if the worker expert was right and it took 144 seconds per inspection, each worker would have to go through five exit inspections daily to amass more than ten minutes of off-the-clock time, which is the standard baseline for a de minimis finding.

The Takeaway

This case is interesting because the state Supreme Court is going to rule on the meaning of de minimis, which will impact on the holding reached in this matter. With that said, the lesson for employers is to always, I mean always, stake out the de minimis defense in any waiting time case, especially a bag case.

It just may work…

What is working time? There are many variations on this theme, some far grayer than others. When does waiting time become working time? Is the employee engaged to be waiting or waiting to be engaged? If the former, then it is working time. A class action involving more than 1,100 workers is now testing these hypotheses. These workers have been granted certification in a class action alleging they were not paid for time spent undergoing security checks before they left the store. The case is entitled Heredia et al. v. Eddie Bauer LLC and was filed in federal court in the Northern District of California.

Isometric Illustration of a Line at Security Checkpoint - Body Scan Machine U.S. District Judge Beth Labson Freeman certified several causes of action, including a class for off-the-clock “exit inspections.” The Judge stated that there were two existing questions common to all class members–did the company mandate that security checks be performed off the clock and, if it did so, was the time spent by employees off the clock, waiting to go through security checks. compensable hours worked.

The theory of the suit (filed by a sales associate at a retail store) was that employees were not properly paid for time spent engaged in screening and time they waited for the screening to be conducted. The employee alleged that she was compelled to undergo bag checks and security inspections whenever she left the facility and these inspections were conducted pursuant to Company policy. Indeed, the worker alleged that supervisors directed her to clock out and wait at the front of the store before a manager would conduct a bag check.

The Company defended by asserting that the employees were only subject to screening if they were carrying a bag that might be utilized to steal store merchandise. The Company further stated that these bag checks were to be conducted on the clock, pursuant to Company policy. It also argued that the named plaintiff could not demonstrate that all class members incurred a common injury because there was no liability for some employees, such as those who did not carry a bag. The Judge observed that Eddie Bauer’s written policies did not mention whether employees had to clock out before undergoing a screening, or whether managers had to advise employees that these screenings were to be conducted on the clock.

Significantly, the judge rejected the contention that plaintiffs could not establish commonality because the Company policy allowed inspections to be performed on the clock. The Court observed that “this argument itself is an answer to the common question: whether Eddie Bauer’s policy and practice was to mandate that security checks be performed off-the-clock. Of course, the parties disagree on the answer to this question, but that does not preclude a finding of commonality under Rule 23(a)(2).”

The Takeaway

This is a troubling case. The element of compulsion, i.e. allegedly making employees punch out and wait for the inspection, makes this case very dangerous for the employer. It is made more interesting because the Supreme Court ruled a few years ago that similar waiting time was not compensable because that waiting time was not directly related to the job.

Maybe that is the next argument the Company should make…

I have blogged about and have long been concerned about working time issues and what constitutes compensable work hours. One of the thorniest of these issues is on-call time and when, if at all, on-call hours become working time. A recent case throws light on this issue, as a Court has held that an Admissions Director for a medical rehabilitation center may be eligible for overtime when she had to work more than forty hours in a week. The case is entitled Butler v. Ciena Health Care Mgt., Inc. and was filed in federal court in the Eastern District of Michigan.

Female doctor in white uniform writing on clipboard Although her title was “Director,” the employee may not have been an exempt employee, thereby making hours worked above forty to be overtime/compensable hours. The Court found that the employee might not have exercised independent judgment in the performance of her job. She “merely” followed admission guidelines and collected information that her boss then utilized to determine whether to admit a particular patient. In exemption issues, it is the duties performed, not the job title or the position description, that determines exempt status and whether someone is eligible for overtime.

The Court denied the defendant’s summary judgment motion and ordered a trial to determine if the employee was exempt. The Court, however, ruled that the worker was not entitled to compensation for the round-the-clock periods when she was required to be on call. The employee was on call twenty-four hours per day Monday-Friday and every other weekend. Workers will get paid for these on-call hours if they are impeded in the pursuit of their personal activities and personal pursuits.

This employee was home when she was on call and could not demonstrate that simply being in an on-call status had any “onerous impact” on her personal activities. The Court noted that the fact that a fraction of patient referrals came during non-work hours showed the Court that these interruptions were not burdensome.

The Takeaway

The great danger in a case like this is that if the employee is deemed non-exempt, so that overtime hours “matter,” the employer might face significant liability. The cure is to conduct an internal audit of all salaried positions, i.e. those normally classified as exempt and make pure up-and-down calls about exempt status.

Especially with the administrative exemption (as herein)…

There have been a great many intern cases recently, cases testing whether interns crossed the line into being statutory employees and therefore covered by the FLSA. I have blogged about these kinds of cases and have specifically blogged about beauty school cases. The Ninth Circuit has just affirmed a lower federal court’s dismissal of a lawsuit from three beauty school students, who allege they were employees while they studied for their degrees. The case is entitled Benjamin, et al v. B & H Education and issued from the Court of Appeals for the Ninth Circuit.

Hairdresser cutting young woman's hairApplying the test enunciated in Glatt v. Fox Searchlight Pictures, Inc., the Court agreed with the lower court’s conclusion that the students had not shown that the educational benefit they had received from attending B&H Education Inc.’s Marinello Schools of Beauty was not superseded by the amount of unpaid “work” that they performed. The Court stated that the “application of the Glatt factors establishes that students were the primary beneficiaries of their labors. Their participation in Marinello’s clinic provided them with the hands-on training they needed to sit for the state licensing exams.”

The Court also found that even if another, more restrictive test, i.e. the DOL factors, was applied, the students would still not be employees. The Court stated that even if it applied these DOL factors, “we view the training provided to plaintiffs to be in an educational environment, because state law requires students to clock hundreds of hours of instruction and practical training in order to qualify for taking the licensing exams.”

The issue was that as part of their educational training, the students at the school were expected to practice providing cosmetology services and, on occasion, some customers received these services. That gave the foundation for the students to allege that they were really “employees.” The Court was not convinced, finding that “as the district court noted in this case, schools typically exercise significant control over their students, but that does not make them employers.”

The Takeaway

There is a tension between the “moment” actual work may get performed and whether that alleged work is too integrally connected to the education to be called “work.”

The trick is knowing where that line gets crossed…

A class of equipment operators and trainees has asked a federal court to approve a $1.35 million settlement of their FLSA class action lawsuit alleging the Company did not fairly pay them their wages and used a gimmick to avoid doing so.  The case is entitled Elliott v. Schlumberger Technology Corp. et al., and was filed in federal court in the District of North Dakota.

The plaintiffs alleged that the Company violated the law by paying them under the “fluctuating workweek” method.   Interestingly (or maybe not so much), the settlement talks took place after U.S. District Judge Ralph R. Erickson granted the Company’s motion to decertify the class.   The Judge ruled that there was insufficient evidence to show that the workers were similarly situated. There are 138 people in the class.

The plaintiffs alleged that the Company paid equipment operators and trainees by the fluctuating-workweek (FWW) method.  That method allows employers to pay workers overtime at a half-time, as opposed to time and one-half, but certain conditions must be met.  The workers claimed that in order to validly use this method, the employees must be paid on a fixed salary, which they were not.

The Court had conditionally certified a collective class of equipment operators, trainees and other similar employees who were employed at the Company plant in Williston, North Dakota, and to whom the Company applied the fluctuating workweek method for at least one week during the three years preceding the lawsuit.

The Takeaway

This case presents a valuable lesson.  Attempted use of the FWW method of payment must have the employees receiving a fixed salary and an agreement, in advance of the work, that the employees understand what the payment arrangements and overtime protocols are going to be.  This allows the employer to pay half time for overtime instead of time and one-half.  Without these two requirements being met, any attempt to use the FWW method is doomed to failure.  Put differently, the FWW method can be the employer’s best friend, if done right.

If not, it is the employer’s worst enemy…

It is well-established that short rest breaks, so-called coffee breaks, are compensable under the Fair Labor Standards Act. In a variation on this age-old theme, in a unique set of circumstances, the Third Circuit has affirmed that employers must pay for breaks of up to twenty (20) minutes. In this case, the Company did not pay sales workers who logged off of their computers for more than a minute and a half. The case is entitled U.S. Department of Labor v. American Future Systems Inc. et al., and issued from the Third Circuit Court of Appeals.

Cup of coffee sitting on tableThe Court held that the FLSA mandates that employers compensate employees for all rest breaks of twenty minutes or less. The Court rejected the Company’s argument that courts should assess the compensability of break times depending on whether the particular break was intended to benefit the employer or the employee. The Company argued that if the break benefited the employee, then no compensation would be due.

The Court disagreed, concluding that this would be “contrary to the regulatory scheme and case law,” and would be “burdensome and unworkable.” The Court stated “employers would have to analyze each break every employee takes to determine whether it primarily benefited the employee or employer. This would not only be ‘an undesirable regulatory intrusion in the workplace with the potential to seriously disrupt many employer-employee relationships, but it would also be difficult, if not impossible, to implement in all workplace settings.”

The workers were paid an hourly wage and were given bonuses based on sales per hour when they were logged onto their computers. Before 2009, the Company’s policy was to give workers two 15-minute breaks each day. It then changed the policy to cut out paid breaks but employees were able to log off of their computers at any time, but the Company only paid them for the time that they were logged on. The Company denominated this as “flex time.” The Company only paid workers if they were logged off for less than 90 seconds, including time spent on bathroom or coffee breaks.

The Third Circuit held that this violated the spirit of the FLSA. Employees had to choose between going to the bathroom or getting paid “unless the employee can sprint from computer to bathroom, relieve him or herself while there, and then sprint back to his or her computer in less than 90 seconds.”

The Takeaway

This is an employee friendly decision but it makes sense if one is strictly analyzing the FLSA, both plain language and intent. The statute protects employees from having their wages withheld when they take short breaks to visit the bathroom, stretch their legs, get a cup of coffee, or simply clear their head after a difficult stretch of work. The Court is really looking towards the general well-being of the employees.

Probably a good thing…

In the movie “Grease,” there is a song entitled “Beauty School Dropout,” sung by Frankie Avalon. Well, in a legal version of that number, the Seventh Circuit has affirmed that beauty school students have, sort of, dropped out of the FLSA as they are not considered employees. The case is entitled Hollins v. Regency Corp., and issued from the Seventh Circuit Court of Appeals.

Hairdresser cutting young woman's hairThe decision affirmed a lower court decision, holding that a cosmetology student who worked at the beauty school’s salon was not an employee of the school. This employer, a cosmetology school, requires that students complete 1,500 hours of classroom and hands-on work. They do this by working in the school’s salon; the customers pay discounted prices. Significantly, the students are not paid, but they do receive credit of hours towards their license as well as academic credit.

The named plaintiff alleged that her hours were compensable under the FLSA and she brought a collective action; the lower court denied the motion for conditional class certification as moot, as the court granted the employer’s motion for summary judgment on the “employee” issue.

The Seventh Circuit looked at the “primary beneficiary” test and determined that under those standards, the workers were not employees. The right approach was that taken by the lower court, which examined the “particular relationship and program.” What was also important was that the work (of serving the public) was required to attain the professional license in cosmetology. The court found that the students were paying the school “for the opportunity to receive both classroom instruction and supervised practical experience.”

It was also probative to the Court that the main business operations were centered on providing an education, not operating “actual” beauty salons. Thus, the Seventh Circuit ruled, “that the fact that students pay not just for the classroom time but also for the practical-training time is fundamentally inconsistent” with the notion that the students were employees.

The Takeaway

There has always been controversy over whether students at these types of schools are FLSA employees. It seems that when students are engaged in the usual and typical jobs and tasks that students engage in when they are pursuing a degree (of any kind), that is not “work.” Perhaps, even though the students here lost, others may try the same tactics, albeit in different jurisdictions.

If the tasks at issue are claimed or argued to be not connected to attaining a degree, maybe these cases would have better prospects of succeeding and giving some unlucky employer a real “haircut.”