Compensable Time

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I have often blogged (and am concerned about) working time issues, especially when they comprise the basis for a class action. These are “soft,” subtle activities that may rise to the level of compensable time, catching n employer unawares. A recent example of this is a class action filed seeking compensation for “homework” done after an employer mandated training session. The case is entitled Acevedo et al. v. Southwest Airlines Company and was filed in federal court in the District of New Mexico.

Child daydreaming while doing math homeworkThe customer service representatives were mostly successful in warding off the employer’s motion to dismiss, which was based on an exemption peculiar to the airline industry. They claim they worked off-the-clock and had to do more work at home following training. The Judge noted that examination of the employees’ job duties is necessary to ascertain if the exemption applies. The Court will make that ultimate determination after discovery is completed.

The Company required the customer representatives to attend training for six weeks; they were paid for that time, the classroom time, but they were not paid for the required homework assignments that were connected to and part of the classroom training. The homework took approximately 60-90 minutes, per night. The plaintiffs also contended that the Company only considered them to be on the clock when they opened a certain telephone program on their computer. The plaintiffs also allege they were not paid for work they were compelled to perform before they clocked in, or were allowed to clock in.

The Court rejected the Company’s attempt to dismiss state law wage claims because they were supposedly preempted by the Railway Labor Act. The Court found that the “plaintiff’s NMMWA claims are independent, state law claims that do not require contractual interpretation. For this reason, the court will not dismiss plaintiff’s NMMWA claims on the basis of preemption under the RLA.”

The Takeaway

Absent a victory on the exemption issue, which may be problematic, I frankly do not see how the Company can prevail on this. The classroom training hours were (obviously) work hours and were paid for as such by the Company. The homework time directly derived from the classroom work and was tied to it. Unless there is a viable de minimis argument/defense (which is, again, doubtful), my advice is to settle this case quickly, unless the Company believes it has a sure-fire winner on the exemption argument. The takeaway is that these soft, subtle types of working time claims can explode on an employer in an instant.

Too bad, back in elementary school, homework was not compensable…

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…

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…

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.”

I often blog about what is and is not working time under the FLSA.  Many class actions have been brought on these issues, with some focused on time waiting for security checks.  A class of retail workers working for Apple Inc. have sought a ruling that the time they spend having their bags checked at work was working time because they were under their employer’s control during these mandated security screenings.  The case is entitled Frlekin et al. v. Apple Inc., and was filed in federal court in the Northern District of California.

Apple employees and compensable time
Copyright: instinia / 123RF Stock Photo

The plaintiffs argued that the time was compensable because it was required and, most importantly, they could be disciplined if they did not comply with the screenings.  The defendants countered by asserting that the screenings were not “required” because the employees were not required to bring backpacks, purses and iPhones to work, which were the items being screened.  The plaintiffs countered that by asserting that this was not “an activity that’s done for the employees’ benefit.”  Their lawyer stated that “you can’t tell an employee how to spend their time and not compensate them for that time.”

The defendants argued that it was insufficient to claim that the employees were under Apple’s control when they went through the security screenings, but rather the focus should be on whether the plaintiffs were required to bring items to work.  The defendants claimed that bringing these items to work was only for the employees’ convenience and therefore fell outside the realm of FLSA work time, which does require some element of compulsion.

The Court ruled in favor of Apple.  The Court noted that just because the bag checks solely benefited Apple and were required did not mean that the time was compensable; the employees could have simply not brought the bags to work.  The Court ruled that “plaintiffs could all freely choose not to bring bags to work, thereby avoiding Apple’s restrictions during exit searches.  That free choice is fatal to their claims.”  The Court also found that “Apple’s searches had no relationship to plaintiffs’ job responsibilities; they were peripheral activities relating to Apple’s theft policies.”  The Judge analogized the time waiting for a bag check, simply because the employer benefits by the activity, to the workers being paid for their commute to work because an employer benefits “by physically having its employees on premises.”

The Takeaway

When I give presentations on working time, I stress that there must be an integral connection of the preliminary activity to the primary/work activity for the time to be compensable.  Also, I stress that where there is an element of employer compulsion, this tilts the scales heavily in favor of the time being deemed working time.  Here, the Court concluded that the activity was not integrally connected.

The freedom of choice was the key, as the choice not to bring a bag ostensibly allowed the worker to pass right through and not “lose” any time in the security clearance process.   In scenarios where preliminary time is compensable, the employee cannot do his primary job without engaging in the preliminary work, such as a cashier who needs to balance out their cash drawer before commencing (or finishing) work.  Here, that was not the case.  Although there was employer compulsion, that did not trump the lack of connection to the primary work being done.

I have lectured and presented extensively on what does and does not constitute working time, in the context of preliminary and postliminary activities.  The key in such determinations is whether the activity at issue is so connected with the main/major job activity as to make the activity at issue compensable.  The US Supreme Court has added context (or, shall I say, clarification) to this analysis by holding that time spent going through security screenings is not compensable time.  The case is entitled Integrity Staffing Solutions Inc. v. Busk et al. and was a 9-0 vote in the Court.

I have held off commenting on this momentous case, sifting through the Opinion and collecting my thoughts.  The Court analyzed whether the main job activity could not be performed if this postliminary activity was not engaged in and concluded it yet could be done.   Although hailed by (mostly management side) commentators as a novel and ground breaking decision, I assert that it is not such a watershed development.

I say this because I analogize it to waiting on line to punch in or out or waiting in line for a paycheck.  These are specific activities enumerated in the Portal to Portal Act as being non-compensable activities.  In fact, the defendant in this case argued exactly that.  The employees argued that the end-of-shift anti-theft search was integral to the primary duty of the workers, i.e. that they do not steal/take Amazon products.

Not so, said the Court.  The main function of the workers was to do their jobs.  Their “job” was not the taking or potential taking of the products they were supposed to be working with.  The Court also rejected the employees’ contention (which was far-fetched, in my view) that they could be compelled to mow the warehouse lawn or wash their supervisor’s car, before or after their shifts, without pay.  The Court noted that the employer did not employ workers to pass through security checks, but rather to pick orders and pack them for shipment to Amazon customers.

The Takeaway

If employees engage in preliminary activities, it is incumbent upon the employer to analyze (objectively) whether the workers cannot perform their “real” job without performing those pre or post shift activities.  If they cannot, the time is working time and must be paid and if those minutes/hours bring the employee(s) over forty hours, then overtime must be paid.