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…

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 on this long, protracted saga many times and I am glad to see that with each posting, the judicial result does not change.  The Seventh Circuit has now affirmed a lower court’s ruling that determined that Chicago police officers did not have a viable claim for overtime under the Fair Labor Standards Act for their after-hours work performed on city-issued BlackBerrys.  The Court concluded that there was a lack of any systemic or uniform policy that stopped the officers from putting in for the overtime.  The case is entitled Allen v. Chicago and issued from the Court of Appeals for the Seventh Circuit.

The panel affirmed U.S. Magistrate Judge Sidney I. Schenkier’s December 2015 decision, which followed a six-day bench trial.  The Seventh Circuit agreed with the lower court that the police department did not act to affirmatively prevent officers from requesting payment for nonscheduled overtime work.  The Court also concluded that the City had no knowledge that officers were not being paid for the work.

The police department issued BlackBerrys to the officers, which they sometimes used for such off-duty work.  They were required to submit “time due slips” to their supervisors and they had to write a short explanation of the work they performed, after which the supervisor approved the time and the officers were then paid.  The Magistrate eventually concluded that the officers did not demonstrate that the department had an “unwritten policy” that discouraged them from submitting slips.

The officers argued that their supervisors knew they were working off-the-clock because, according to them, the City gave them BlackBerrys so they could be contacted at any time.  The City countered by pointing to evidence that supervisors believed the officers were preparing the overtime slips so they could be paid.  The Seventh Circuit rejected the contention that the department had actual or constructive knowledge that overtime was being underreported and/or that there was pressure on the officers not to report that time.

Interestingly, the Seventh Circuit compared this case to the Sixth Circuit holding in White v.  Baptist Memorial Health Care Center.  In that 2012 decision, the Sixth Circuit held that an employee’s failure to accurately record/log work hours doomed her FLSA suit for overtime.  The Seventh Circuit observed “plaintiffs in this case, like the nurse in White, worked time they were not scheduled to work, sometimes with their supervisors’ knowledge. They had a way to report that time, but they did not use it, through no fault of the employer,” the Seventh Circuit said. “Reasonable diligence did not, in the district court’s view, require the employer to investigate further. Since … we see no clear error in that view of the facts, we see no legal error in reaching the same conclusion as the White court.”

The Takeaway

In order for employees to be paid for alleged off-the-clock work, they must show that their employer knew or should have known about the work.  They must also show that there was a system wide policy or practice that prevented them from being paid.  There was no evidence of either of these scenarios in this case and, more importantly, there was evidence that the City paid for this working time!

The correct result…

I have blogged before about fancy golf clubs being sued for FLSA violations.  Well, here is another one.  The Farm Neck Golf Club is a members-only golf club on Martha’s Vineyard, where Presidents Barack Obama and Bill Clinton have played.  This organization was just sued in a putative collective/class action by a cafe cook who alleged that she was not properly paid for overtime hours.  The case is entitled Shkuratova v. Farm Neck Association Inc. and was filed in federal court in the District of Massachusetts.

Golf Course
Copyright: Photozek07 / 123RF Stock Photo

The former cook, Anna Shkuratova, began a putative class action over overtime compensation for violations of the federal Fair Labor Standards Act and state law.  The Complaint stated that the “plaintiff was subject to defendants’ common practices, policies or plans including failing to pay at least minimum wage for all regular hours worked, failing to pay at least one and one-half times the regular rate of pay for hours worked in excess of 40 hours per week, failing to compensate plaintiff and class members for hours worked off the clock and failing to keep accurate time and payroll records in violation of the FLSA.”

The golf club is located in a very pretty piece of farmland on the eastern edge of the island, right on the water.  It has earned a consistently high rating in Golf Digest’s Places to Play, “and is considered by many to be one of the premiere golfing experiences in the Northeast, a true test of golf in an idyllic setting.”

The named plaintiff states that she worked as a cook at the club’s Cafe at Farm Neck from May 2016-September 2016.  The plaintiffs seek five subclasses of employees who were not paid minimum and overtime wages and who worked off the clock, such as kitchen employees, front-of-house cafe workers, golf course workers such as golf professionals and pro shop salespeople, tennis pros and maintenance workers.

The Takeaway

It is the off-the-clock allegations that, to me, are the most troubling.  Oftentimes, employers have to work under very tight labor budgets and there is pressure, implicit or otherwise, to stay within those budgets.  It is that pressure that sometimes results in FLSA violations.

Sometimes…

Senator Elizabeth Warren, D-Mass., and Patty Murray, D-Wash., took testimony from workers at Carl’s Jr. and Hardee’s. These are the businesses that are operated by Labor Secretary nominee Andrew Puzder. The employees spoke of wage theft and other allegedly improper employment practices.

The Senators organized the forum after Sen. Lamar Alexander, R-Tenn. (the Chair of the Senate Health, Education, Labor and Pensions Committee) denied a request by several Democratic senators to allow the workers to testify at Puzder’s forthcoming confirmation hearing.  Senator Warren utilized the event to attack a number of policy positions that the nominee has taken, such as his opposition to an increase in the federal minimum wage and his opposition to the USDOL’s initiative to increase the numbers of workers eligible for overtime.

One of the workers testified that restrictive labor budgets set down for the individual restaurants compelled managers to have employees work off-the-clock without pay to make sure that all of the work was done.  She also asserted that the Company placed restrictions on the number of full-time workers so that health care benefits need not be provided.

Senator Warren observed that “if you work for a living, this man is important to you.” She noted that the Secretary will be responsible for enforcing wage and hour laws and establishing workplace safety standards and then added that “unfortunately, Mr. Puzder is not the kind of person that workers can trust will stand up for them.”

Senator Murray observed that “I can’t help but think about President-elect Trump throughout the campaign telling rally after rally that he was on the side of workers.  I met with the secretary of labor nominee, Mr. Puzder, and it’s such a contrast to what I heard President-elect Trump say. … I’m increasingly concerned that this is a very broken promise from the president-elect.”

The Takeaway

It is difficult to envision how this Secretary will be a pro-employee advocate. His views have been well-publicized and they will be/are in line with the very much pro-business (i.e. anti-worker) views of the new President.

Assuming the nominee is confirmed, we will soon see where this goes…

A group of New Jersey sales associates who work in Dish Network LLC call centers urged a federal court to confirm a $1.9 million arbitration award stemming from a proposed class action, in which the workers said the satellite television provider miscalculated their overtime pay rates.  The case is entitled Frisari v. Dish Network LLC, and was filed in federal court in the District of New Jersey.

Group of satellite dishes
Copyright: foottoo / 123RF Stock Photo

The workers urge that the award, which gave the employees overtime at time and one-half, instead of the half-time overtime rates they were paid, is appropriate under long established principles.  The plaintiffs urge that “it is well established that when this court reviews an arbitration award, as long as the arbitrator’s award is not by ‘his own brand of industrial justice,’ the award is legitimate.”

The plaintiffs’ lawyer stated that the award shows that employers could not “cut corners” by paying overtime based on a half-time premium, which is a form of the FLSA “fluctuating work week” method.  He stated that “this sets precedent that companies cannot use the fluctuating work week method under the New Jersey Wage & Hour Law.”

The employees claimed that they were compelled to work off the clock and were prevented from accurately reporting these overtime hours.  They asserted that they were not paid while they performed preliminary duties before their shifts began, such as booting up computers and launching software.  The employees also claimed that they often worked through lunch, although these meal breaks were counted as unpaid periods.

The employees had filed suit and then the Company claimed that they were compelled to arbitrate their claims individually, as opposed to a class action, but the arbitrator held that there was the possibility the workers could still proceed with their claims as a class.   The Company sought to vacate that award but was unsuccessful.  In the final order he entered, the arbitrator awarded $480,000 in attorneys’ fees to the class and $1.9 million damages for the class.

The Takeaway

This case illustrates an interesting trend that is perhaps developing.  I believe (and I see it in my practice) that plaintiff lawyers are becoming less averse to litigating FLSA claims in an arbitral forum, where defendants would much prefer to be in.  On balance, I think it is better for both sides.  It is much cheaper, much faster and arbitrators are usually pretty savvy, both in deciding the case on the merits and facilitating settlements.

A win win.  Maybe…

I blogged about this case a few weeks ago and opined that the employer would have an uphill fight.  Maybe they heard me.  The case has now been put in abeyance as the parties seek to work out a settlement.  This initiative follows my thinking in many of these cases—try to get out early and as cheap as you can (especially if, as the employer, you perceive you have exposure).  The case is entitled Werman et al. v. Rotonda Golf Partners LLC and was filed in federal court in the Middle District of Florida.

Golf course
Copyright: happyalex / 123RF Stock Photo

The proposed collective action was based on the theory that employees were forced to work off the clock and were therefore not paid proper overtime.  The lawyers filed a joint motion last week asking for a stay so they could discuss settlement.  The case is now in abeyance until October 7.

The joint motion noted that “the parties respectfully submit that it would be most efficient for the parties to spend their time and limited resources working toward a mutually agreeable settlement rather than responding to the amended complaint, filing a case management report, engaging in discovery and engaging in motion practice relating to, among other things, the overtime exemption asserted by defendants.”

The protocol agreed on will include letters being sent to the employees so they can opt in if they choose.  The defendants then have to provide the payroll records to the plaintiffs’ lawyers so they can “reasonably necessary to determine whether, as plaintiffs allege but which defendants deny, compensation is owed to the opt-in.”

The suit alleges that employees were directed not to punch in when they got to work and to keep working after they punched out.  The employees allege that they received two paychecks that showed only a portion of their hours worked.  They also received part of their monies as “employees” and then received the rest of their pay through a 1099, i.e. as independent contractors.  The workers contend that they were intentionally misclassified so the employers could avoid paying overtime.

The Takeaway

This is a big step forward in resolving this litigation and it will dramatically cut down the litigation fees which the employer would have to spend and avoid inflating the adversary’s fee petition/demand.

It appears to me, as a management side practitioner, that this is the right strategy.  The most crucial thing is to fix what was broken—treating people as W2 employees and 1099 independent contractors in the same work week(s) smacks of deception and an intent to avoid payment of overtime.  Off-the-clock cases are very bothersome, especially when the evidence suggests that there was a focused, management effort to order people to work off-the-clock.

A sand trap, but there is a way out…

The financial giant Morgan Stanley announced that it will settle four FLSA collective actions for six million dollars; the suits, filed by financial adviser trainees, alleged that they were not paid overtime properly.  The case is entitled Devries v. Morgan Stanley & Co. LLC et al. and was filed in federal court in the Southern District of Florida.

Dollars
Copyright: kentoh / 123RF Stock Photo

The parties asked U.S. District Judge Kenneth A. Marra to grant preliminary approval of the settlement, which includes attorneys’ fees of almost four million dollars as well.  The filing papers asserted that “the proposed settlement satisfies the criteria for approval of a Fair Labor Standards Act collective action settlement because it was reached after significant information exchange and contested litigation in four venues, and was the result of arm’s length settlement negotiations conducted by experienced counsel well-versed in wage and hour law.”

The settlement provides that members of two of the four collective actions will receive the equivalent of six hours of unpaid overtime for each week they worked, while the others will receive payments equivalent to those reached in a very similar case involving this company, which ended in 2014 with a $4.2 million settlement.  The case involved allegedly unpaid training and study time, i.e. off-the-clock work.  These types of cases have reached epidemic proportion and are showing no signs of losing vitality.  The plaintiffs alleged that although the bank had a written policy to pay overtime, there existed, in reality, a de facto “off-the-clock” policy in violation of the FLSA.

The Company defended this case aggressively, as noted by the assertions in the filings that the “plaintiffs believe that this amount represents a very fair settlement given the amount of unpaid overtime that was claimed, the uncertainty of success on collective certification, and defendants’ defenses on the merits, including its contention that that it provided paid time during the workweek for studying during training weeks and that it took steps to prevent its employees from studying off the clock.”

The Takeaway

The Company put forth a statement that it agreed to settle these lawsuits in order to avoid the cost and distraction of prolonged litigation.  That was the correct thing to do but the more important thing is to now make sure that proactive steps are taken to ensure that if study/reading time is mandated (or implicitly mandated) that the employees are compensated for that time.