California Public Agency Labor and Employment Blog - Useful Information for Navigating Legal Challenges

This blog post was authored by Maila Labadie

Emerging technologies and increased demand for worker productivity during lean economic times have changed the way Americans work.  Today, employees routinely check their smartphones at all hours for emails, text messages, voicemails, and other electronic transmissions.  The modern workplace includes anywhere within range of a wireless signal.  Some employees even seem to be addicted to using their smartphones.  In 2006, Webster’s New College Dictionary’s word of the year was “CrackBerry,” describing a person addicted to his or her BlackBerry device.

Although smartphones and other personal electronic devices offer employers and employees many advantages in the workplace, use of these devices can have significant legal implications.  One such legal issue is whether employers must pay nonexempt employees overtime under the Fair Labor Standards Act (FLSA) for time spent checking smartphones after work hours.

The FLSA requires employers to pay overtime compensation to nonexempt or hourly employees at 1.5 times the regular rate of hourly pay for all hours worked beyond a specified number (usually 40 hours in a 7 day workweek). (29 U.S.C. section 207(a)(1)).  Although “de minimis” work or insignificant periods of time are treated as non-compensable under the FLSA, electronic smartphone communications on the aggregate may amount to substantial work time for employees.  (29 C.F.R. section 785.47).  Furthermore, even work that an employer does not request is compensable if the employer has actual or constructive knowledge of it.  (29 C.F.R. section 785.11).

Employers should be wary of lawsuits for electronic overtime because employees who prevail can recover lost wages (plus interest), liquidated damages, and attorneys’ fees and costs.  (29 U.S.C. section 216(b)).  Significantly, the FLSA also allows employees to file class action lawsuits for a class of similarly situated employees to recover unpaid overtime.  Employers should note that the number of FLSA lawsuits filed is on the rise, and there are several pending cases involving employer liability for electronic overtime.

One case of particular significance to public employers is the 2013 federal district court case of Allen v. City of Chicago.  In this case, the Chicago Police Department issued BlackBerrys to a number of its officers, including a Sergeant named Jeffrey Allen.  Sergeant Allen later brought a class action lawsuit against the City, alleging that he and other similarly situated officers were entitled to unpaid overtime compensation under the FLSA for off-duty use of their BlackBerrys.  Allen claimed that he and other officers were required to use their BlackBerrys to perform off-duty work such as responding to telephone calls, emails, voicemails, and text messages.  Allen stated that the Department expected officers to be available 24 hours per day via BlackBerry, and officers felt obligated to respond to emails while off duty to improve chances of receiving promotions or coveted assignments.  The City moved to dismiss the action, but the trial court denied the motion and the matter will now proceed forward towards trial.

Potential defenses to class action overtime claims for smartphone usage include (1) that the varied extent of smartphone usage among employees defeats the similarly situated requirement and (2) that employees may be unable to prove the amount of time they actually spent conducting off-duty smartphone work.  Nonetheless, employers should be concerned that courts have permitted such actions to proceed to trial, and employers should take the following precautions to reduce potential liability for electronic overtime lawsuits:

1. Properly classify employees as exempt or nonexempt based on the employee’s job duties and salary.
2. If possible, limit issuance of such devices to employees who are truly exempt and prohibit nonexempt employees from having remote access to work communications on their personal smartphones.
3. If smartphones must be issued to nonexempt employees because of business necessity or if nonexempt employees have personal smartphones with remote access, require employees to keep detailed time records of each phone related activity, including the date, time, and description of the communication. (The Department of Labor recently issued an “app” that allows employees to track hours worked: http://www.dol.gov/dol/apps/timesheet.htm).
4. Develop a comprehensive written policy regarding the use of smartphones, defining the agency’s objectives regarding remote access and employee overtime.
5. Regularly remind employees of agency policies against performing unauthorized work, and follow through with disciplinary action against employees who violate the policy (i.e. confiscate employer-owned phones or suspend remote access privileges).
6. Unless prohibited by privacy laws, collective bargaining agreements, or other authorities, monitor employees’ access to and use of the network and email.
7. Some supervisors send emails with the “delayed delivery” feature on Outlook so that employees do not receive the email until they get to work.

We anticipate that these types of claims will become more prevalent.  Therefore, we encourage agencies to proactively address the issue of off-the-clock hours caused by use of smartphone technology so that your agency can avoid being challenged.

This post was authored by Heather DeBlanc

On May 8, 2013, the Department of Labor (DOL) issued guidance setting an October 1, 2013 deadline for employers to provide notice of the exchange (now called the Health Insurance Marketplace) to all employees.  The notice to employees must:

1. Inform employees of the existence of the Marketplace, including a description of the services provided by the Marketplace, and the manner in which employees may contact the Marketplace to request assistance;
2. Inform employees that if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, they may be eligible for a premium tax credit under section 36B of the Internal Revenue Code if the employee purchases a qualified health plan through the Marketplace; and
3. Inform employees that if they purchase a qualified health plan through the Marketplace, they may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

Who Must Provide Notice?
The requirement applies to all employers who are subject to the Fair Labor Standards Act.   See www.dol.gov/elaws/esa/flsa/scope/screen24.asp.  Unlike the Affordable Care Act’s shared responsibility provision, this notice requirement is not limited to large employers who employed an average of 50 or more full-time employees during the previous calendar year. 

When Must Employer Provide Notice?
An employer must provide the Notice to current employees before October 1, 2013.  Beginning October 1, 2013, the employer must provide this Notice to new employees at the time of hiring (i.e. within 14 days of an employee’s start date).

Is A Model Notice Available?
Yes.  The DOL also released three model notices (1) one for employers who offer a health plan to some or all employees, (2) one for employers who do not offer a health plan, and (3) a COBRA model election notice.  The model notices are available on the DOL’s Patient Protection and Affordable Care Act web page at the following link: http://www.dol.gov/ebsa/healthreform/index.html.

Where Can An Employer Find Additional Information?
The DOL updated its web page with information on the notice to employees of coverage options.  Employers may find further information at the following link: http://www.dol.gov/ebsa/newsroom/tr13-02.html.  

In Genesis Healthcare Corp. v. Symczyk, just decided on April 16, 2013, the U.S. Supreme Court held that, in a Fair Labor Standards Act (“FLSA”) case, an early settlement offer to an employee which moots his or her individual FLSA claim will preclude the employee from continuing with a larger collective action on behalf of other employees.

Under the FLSA, most employees who work more than 40 hours in a week are entitled to overtime compensation at one and one-half times their regular rate of pay.  An employee who files a lawsuit can bring it as a “collective action” on behalf of other similarly situated fellow employees, thereby converting a lawsuit by one employee for unpaid overtime into a significantly larger case.  The other employees will have the choice to opt in to the case if the Court conditionally “certifies” the matter as a collective action, i.e., confirms that the potential opt-ins are similarly situated to the named plaintiff and that other requirements are met.

Under long-established principles of law founded in the U.S. Constitution’s Article III, however, federal courts cannot hear “moot” cases, i.e., ones in which the plaintiff does not actually have anything sufficiently substantial to gain by winning the lawsuit.  Management lawyers have been able to use this principle to obtain early dismissals of FLSA cases before they can be certified as collective actions.  This can be done by offering the lone initial plaintiff everything he or she could win for themselves through the lawsuit – claimed overtime, liquidated damages, and attorneys’ fees.  Dismissal under these circumstances is hardly an unfair result, since the plaintiff has been offered everything he or she sought personally.  It may, however, be a disappointment to the plaintiff’s lawyers who sought to represent a larger class.

The underlying facts of Genesis Healthcare matched the fact pattern above.  The plaintiff, registered nurse Laura Symczyk, filed an FLSA lawsuit against her former employer for unpaid work time during breaks.  However, before she moved to certify the matter as a collective action, management made an offer of judgment to pay her $7,500 plus attorneys’ fees and expenses to satisfy all her claims.  She refused to accept the offer, and the offer lapsed.  The District Court dismissed the case as moot, because plaintiff had been offered all of what she sought for herself in the lawsuit.  The U.S. Court of Appeals in Philadelphia reversed, reasoning among other things that allowing such an easy dismissal of the lawsuit would frustrate the purpose of the collective action procedure authorized by the FLSA.

In a 5-4 decision, the U.S. Supreme Court reversed and found that the District Court had properly dismissed Symczyk’s lawsuit.  In an opinion by Justice Thomas, the Court described first that a split in authority existed over whether a settlement offer that was not accepted and then lapsed (like the one made to Symczyk) could moot an FLSA collective action.  The Court stated that it did not need to resolve the split, however, because the parties and the courts below assumed the offer made the case moot as to Symczyk.  The Court proceeded to reason that, if an individual FLSA plaintiff’s claim is moot, the fact that plaintiff still wants to serve as a representative for other members of the workforce in a collective action does not mean there is a still a “live” case for mootness purposes.  The case must be dismissed.

In a dissenting opinion joined by three other Justices, Justice Kagan seized on the fact that the majority opinion relied on an assumption by the parties and the courts below that the lapsed settlement offer mooted the case.  If the assumption was a mistaken one – if a case survives mootness after a settlement offer lapses without the plaintiff accepting it -- then the majority was writing about a factual scenario that would not arise again unless the parties made a similar potentially mistaken assumption.  In very lively judicial writing, Justice Kagan’s dissent describes: “The Court today resolves an imaginary question, based on a mistake the courts below made about this case and others like it.”  The concurring opinion encourages readers: “Feel free to relegate the majority's decision to the furthest reaches of your mind: The situation it addresses should never again arise.”

The majority opinion responds to Justice Kagan in a footnote.  It explains that, if an employer makes an offer to settle that completely resolves the plaintiff’s claims, and the plaintiff refuses to accept it, that does not necessarily end the matter.  There are procedures authorized by some lower courts under which the employer can require that judgment be entered along the lines of the settlement. The plaintiff may be effectively required to accept the offer, and this paves the way for a mootness dismissal.

Genesis Healthcare is a good case for an employer who knows it has potential FLSA liability and is willing up front to pay the plaintiff the full amount claimed to settle, and thereby potentially avoid conditional certification of a collective action.  An offer that will make the plaintiff whole and potentially moot the plaintiff’s claim would need to pay the plaintiff in full, which means the employer would have to consider paying not only claimed overtime, but also liquidated (double) damages and any attorneys’ fees plaintiff incurred.

Justice Kagan’s dissent points up major caveats for employers to consider in relying on this decision.  The U.S. Supreme Court’s opinion does not state what type of offer will make a case moot.  The answer is particularly uncertain when a plaintiff rejects the offer in question and it expires.  Because there are questions unanswered in the Genesis Healthcare opinion, employers will have to watch carefully for further developments in this area of the law.

The U.S. Court of Appeals for the Ninth Circuit has just issued a decision that expansively describes public employee protected free speech in the context of labor-management relations.  On March 22, 2013, in Ellins v. Sierra Madre, the Ninth Circuit determined that a city police officer who served as union president could state a First Amendment retaliation claim based on his union-related speech.  The speech at issue included his successfully leading a vote of “no confidence” against his Police Chief, and his union’s issuing press releases about the vote and that criticized the Chief’s management style.  The police officer, John Ellins, argued that a subsequent delay in his receiving authorization for a 5% pay increase amounted to retaliation for his engaging in these speech activities.  The trial court had found that Ellins could not make out a First Amendment retaliation claim, and granted motions for summary judgment for the City and Police Chief.  On appeal, however, the Ninth Circuit reversed.  Its opinion touched on many issues that arise in public employee First Amendment cases, and interpreted them in the specific context of employee union-related speech.

For an employee to win a First Amendment retaliation case against his or her government employer, the employee must prove among other things (1) that his or her speech was not on a trivial or mundane workplace issue but instead dealt with a matter of “public concern,” and (2) that the employee spoke as a private citizen, i.e., outside of his or her “official duties.”

In discussing that there was enough evidence for plaintiff’s case to go to a jury, the Court made a number of important points.

First, the Court described that Ellins’s evidence, if the jury believed it, would show that he had spoken on a matter of “public concern.”  The U.S. Supreme Court has previously described public concern as “any matter of political, social, or other concern to the community.”  Applying this standard, the Ninth Circuit has previously described that “individual personnel disputes and grievances” that “would be of no relevance to the public’s evaluation of the performance of governmental agencies” does not constitute a matter of public concern.  In Ellins, however, the Court attributed substantial importance to whether the speech was made by a lone employee (or small group) or instead was speech on behalf of the union.  The Court suggested that the record showed that the speech at issue was not an “individual personnel grievance” but essentially “collective” grievances raised by the union.  In the Court’s view, the fact Ellins spoke for his union could effectively convert his speech into protected speech even if it would not have that protection if spoken by a lone employee.

Second, the Court held that Ellins’s speech was outside of his “official duties.”  Management lawyers have taken the position in these types of cases that a public employee’s speech as a representative of his or her union constitutes speech not as a private citizen but as a government employee, so that it is speech pursuant to “official duties” – duties on behalf of the union, and as part and parcel of the employees’ work for the employer.  As speech pursuant to “official duties” it lacks First Amendment protection vis-à-vis the public employer.  The Court in Ellins rejected this argument, indicating that here, the employee speech as a union President was at odds with management and thus not pursuant to “official duties.”  The opinion described: “Given the inherent institutional conflict of interest between an employer and its employees' union, we conclude that a police officer does not act in furtherance of his public duties when speaking as a representative of the police union.”

Next, the Court went on to find for the plaintiff on a number of other issues that arise often in employee First Amendment cases.  It determined that the delay in payment of the 5% increase was an “adverse action” against Ellins; that there was enough evidence to go to a jury on whether Ellins’s speech as the Association President was a “substantial or motivating” factor for the adverse action, and that there was enough evidence to go to a jury on whether the Department had “adequate justification” for further evaluating the certificate before signing.  The Court also found that the Chief did not have qualified immunity (a protection from individual liability for constitutional rights not “clearly established”).   

In a silver lining for management, the Court found that the trial court had properly granted the motion for summary judgment by the City.  To prove the liability of the City itself, the plaintiff had to show under the landmark case Monell v. Department of Social Services that one of the following circumstances existed: “the plaintiff was injured pursuant to an expressly adopted official policy, a long-standing practice or custom, or the decision of a ‘final policymaker.’”  The Ninth Circuit in Ellins found that the evidence in the record showed none of these circumstances.

The Ellins case has a concurring opinion by Judge Rawlinson, who opined that the Court was making a decision that was correct on the facts, but that the Court’s opinion did not need to elaborate.  Judge Rawlinson described: “I write separately to clarify that this case was decided on summary judgment and no definitive rulings on the factual issues should have been made by the district court or should be made by us.”  Among other things, Judge Rawlinson was skeptical that the Court could opine conclusively on whether Ellins had spoken pursuant to “official duties.”  His concurring opinion expressed that the matter should be resolved by the trial court on remand based on more complete evidence.

The “take-away” for management:  The Court’s reasoning in Ellins presents a number of theories that make it more likely that public employees serving in their capacity as union officials can state First Amendment retaliation claims against management for speech made in the labor-relations context.  Based on the reasoning in Ellins, union-related “speech” by employees such as “no confidence” votes, union statements about department-wide operations, and other matters, can potentially result in constitutional claims.  It is important to note, however, that the Court’s holding only stated that issues of fact existed to be tried by a jury.  The Court did not conclusively determine the facts in Ellins.

Another pending Free Speech case: Followers of public sector free speech cases will note that there is another significant Ninth Circuit case pending decision in this area.  In Dahlia v. Rodriguez, an “en banc” panel of 11 judges will determine the scope of “official duties” in the law enforcement context.  The Dahlia court is reconsidering the established rule that because peace officers in California have broad job duties to report illegal conduct by anyone, even persons in their own agency, this necessarily brings much whistleblowing activity by officers within the scope of “official duties,” so that the whistleblowing lacks First Amendment protection.  LCW has previously blogged about the Dahlia case, and its rehearing en banc.

The en banc Court heard oral argument on March 20, 2013, only a few days before the Ellins opinion issued.  Questioning by the judges was sharply against a broad interpretation of “official duties” in law enforcement, indicating the Court will likely issue a rule more accommodating to First Amendment claims of law enforcement.  Chief Judge Alex Kozinski, who led the questioning initially on March 20, appeared to favor retaining existing precedent, but refining it to take into account in some way whether the officer’s whistleblowing activity was directed to a law enforcement agency that actually had a duty to investigate the alleged misconduct.

We will keep you advised of the Ninth Circuit’s decision in Dahlia when it issues.  We will also advise whether the Ninth Circuit decides to rehear any aspect of the Ellins case and its holdings on union-related speech.

(As a point of disclosure, our firm is proud to have prepared an amicus curiae brief in support of rehearing en banc of Ellins, on behalf of the League of California Cities.)

This blog post was authored by Alison Kosinski 

Many employers have chosen to implement “auto-deduct” policies, which automatically deduct a set amount of time each day or shift for an employee’s meal break.  While the Department of Labor has stated that automatic deductions are lawful under the Fair Labor Standards Act (FLSA), these policies may run afoul of basic FLSA principles if employers are not careful.

The FLSA requires that employers compensate employees for all work time.  This time includes work either “suffered or permitted,” even if the employer is not actually aware that the employee is performing work.  Meal times can be tricky, depending on what an employee does while eating away.  In general, a meal period is not compensable:

“[a]s long as the employee can pursue his or her mealtime adequately and comfortably, is not engaged in the performance of any substantial duties, and does not spend time predominantly for the employer’s benefit . . .”

(White v. Baptist Memorial Health Care Corp. (6th Cir. 2012) 699 F.3d 869.) Rather than requiring employees to clock in and out for their meal breaks, employers may, for example, automatically deduct 30 minutes from each employee’s daily time records, or 2½ hours from their weekly records.  While this option may have some administrative advantages, employers must be careful when implementing such a policy.

For example, in Quickley v. University of Maryland Medical System Corporation, the employer hospital automatically deducted 30 minutes from employees’ daily time records for scheduled meal breaks.  Employees used a Kronos system to swipe their ID badges at the beginning and end of their work days, but did not swipe in and out for meal breaks.  The employees sued and alleged that there was no way, either on the Kronos system or otherwise, to adjust time if they worked during a meal break.  In fact, the Kronos timekeeping system provided opt-out buttons for other time missed, but not for missed meal periods.  Based on this information, the district court denied the employer’s motion to dismiss, allowing the suit to go forward.

In Quickley, the court emphasized that when an employer’s automatic deduction policy shifts the burden on to the employee to report time worked during meal breaks, the employer must make its policy clear and make every effort to assist employees in reporting their time worked during the meal breaks.

In addition, if an employer establishes a reasonable process for employees to report time worked during a meal period, then the employee must follow the process.  If he or she does not, the employer may not be liable for that time worked.  This was the lesson from White v. Baptist Memorial Health Care Corporation, which we reported on our web-site.

In sum, if an agency automatically deducts meal breaks from its employees’ daily time records, it must also implement a policy and process for employees to override the automatic deduction if they work a portion or all of their meal breaks.  This policy should be easily accessible to employees and reviewed with employees during orientation and periodically thereafter.  It is advisable that employers make the procedure to override user-friendly and provide training on any technical methods for overriding automatic deductions.  We also recommend maintaining records of training provided to employees on how to override the automatic deductions.