Employee Usage of Smartphones After Hours - Are Employers Liable for Overtime?

hourglass-small.jpgThis 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.

U.S. Supreme Court OKs "Strategic" Settlement Offers in FLSA Cases

US Supreme Court.jpgIn 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.

Automatic Deduction Policies - How to Ensure They Comply with the FLSA

hourglass-small.jpgThis 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.

Can an Employer Change its Workweek to Limit its Overtime Obligations? California Court May be Out of Step

hourglass-small.jpgThis blog post was authored by Paul Knothe

A California Court of Appeal decision recently went against existing authority interpreting the FLSA and found an employer’s change to employees’ FLSA workweeks with the purpose of  limiting the employer’s overtime obligations to “evade” the overtime requirements of the FLSA.  The decision has come under sharp criticism from a federal court. 

Under the FLSA, an employee is owed overtime for hours over 40 in a workweek, defined as a fixed and regularly recurring period of seven consecutive 24-hour periods that need not coincide with the calendar week but may begin on any day and at any hour of the day.

This allows employers to implement alternative and flex schedules, such as a 9/80, without incurring overtime.  Once the beginning of the workweek is established, it becomes fixed regardless of the actual hours worked.  Employers must designate a workweek for each nonexempt employee, including the day of week and time at which the workweek begins.  The employer my change the workweek if the change is intended to be permanent and is not designed to evade the overtime requirements of the FLSA.

In April 2011, the California Court of Appeal decided Seymore v. Metson Marine.  The court found that the employer’s only reason for changing the FLSA workweek to differ from the employees’ actual work schedules was to reduce its overtime obligations and that this violated the requirement that a workweek cannot be “designed to evade the overtime requirements of the Act.”  The court held that a workweek could only differ from the actual work schedule for a “bona fide business reason” other than reducing overtime. 

In October 2012, the 8th Circuit disagreed sharply with Seymore in Abshire v. Redland Energy Services, LLCin which it rejected the argument that the FLSA prohibits an employer from changing an existing workweek for the purpose of reducing employee overtime. Addressing Seymore directly, the 8th Circuit wrote, “we decline to afford that decision any weight in construing the FLSA.”

When changing an employee’s actual work schedule, such as to a 9/80, the employer should still change the FLSA workweek accordingly to ensure that there is no inadvertent creation of overtime.  This will require bargaining on behalf of represented employees because it will change the employees’ work hours. 

Whether wrongly decided or not, the Seymore decision is published and plaintiffs’ attorneys are likely aware of it.  If sued on this theory, an employer would be wise to remove the case to federal court to take advantage of federal court and Department of Labor interpretations of the FLSA which have permitted employers to modify FLSA workweeks even if the purpose is to reduce the payment of overtime. 

How Much Flexibility Does A Public Employer Have With Compensatory Time Policies?

hourglass-small.jpgThis post was authored by Jennifer Rosner

Many employers enter into agreements with employee associations giving employees the right to earn compensatory time off (CTO)  in lieu of cash for overtime.   However, if an employer provides CTO, must employers allow its employees to use CTO at the employees’ option?  In 1987, the Department of Labor implemented regulations to enforce the CTO provision of the FLSA, Section 7(o).[1]  Per the regulation, an employee who requests to use accumulated CTO is permitted to use such time “within a reasonable period” after making the request.  If the employer cannot grant the CTO request within a reasonable period, the denial of the request will be unlawful unless the employer can demonstrate that granting the request would “unduly disrupt” its operations. [2]

These terms “within a reasonable period” and “unduly disrupt” have been the subject of debate.  Mere inconvenience to the employer is insufficient to deny an employee’s request to take CTO on the basis that it would be unduly disruptive.[3]   However, what constitutes “undue disruption” will likely depend upon the circumstances.

But what does it mean to grant the employee’s CTO request within a reasonable period?  There has been extensive litigation regarding employers' obligations to grant a CTO request.  The DOL has interpreted its regulations as requiring that an employee's request for compensatory time on a specific date be granted unless doing so would unduly disrupt the agency's operations.[4]   

This interpretation was challenged by the Ninth Circuit in Mortensen v. County of Sacramento (9th Cir. 2004) 368 F.3d 1082.  In Mortensen, the Court held that that an employer does not need to allow an employee to use accrued CTO on the specific day requested by the employee, but can instead honor the request by providing alternative dates within a reasonable time period after the request to use comp time is made.  Thus, once an employee requests the use of CTO, the employer has a reasonable period of time to grant the request.[5]   

On April 5, 2011, the DOL issued regulations that took effect on May 5, 2011.  The final rules did not include a proposed change to allow public-sector employers to grant employees compensatory time requested “within a reasonable period” of the request, instead of on the specific dates requested.  Instead, the final rule left the regulations unchanged, “consistent with [DOL’s] longstanding position that employees are entitled to use compensatory time on the date requested absent undue disruption to the agency.”[6]

Accordingly, there still remains a disparity between the Ninth Circuit (here in California) and the Department of Labor.  This disparity will only be resolved if the US Supreme Court decides to review the issue.  In the meantime, although California public employers may continue to follow the Ninth Circuit’s decision which permits them to define a reasonable window of time in which an employee may use CTO instead of permitting the employee to use CTO on the specific day demanded by the employee, in light of the DOL comment on their own regulation, plaintiffs’ lawyers may challenge that interpretation.  Thus, the inconsistency between the 9th Circuit and the DOL in the interpretation of the same provision of the law, creates some risk for California employers in the denial of CTO.   An employer’s improper denial of an employee’s request to use CTO can result in liquidated (up to double) damages to the employee.[7] We believe that until the Supreme Court decides otherwise, following the Mortensen case, likely remains safe, but like so much of the FLSA, it is not entirely clear.


[1] 29 CFR 553.20-.28

[2] 29 U.S.C. § 207(o)(5)(B).

[3] 29 U.S.C. § 553.25(d).

[4] Wage and Hour Opinion Letter 1994 WL 1004861 (Aug. 19, 1994); DeBraska v. City of Milwaukee (E.D. Wis. 2000)  131 F. Supp. 2d 1032, 1034-35 ( (deferring to the Department's interpretation of its regulations as requiring that the specific compensatory time requested must be granted absent undue disruption).

[5] Id. at 1090.

[6] 76 FR 18832-01 (April 5, 2011)

[7] Kimpel v. Williams (C.D. Cal. 1999) 1999 WL 638580.

The Meaning of "Clothes" To Be Decided by U.S. Supreme Court

Blue Collar Worker.jpg

Section 203(o) of the Fair Labor Standards Act excludes from the definition of hours worked time spent “changing clothes or washing at the beginning or end of each workday” if it has been excluded “by the express terms of or by custom or practice under a bona fide collective-bargaining agreement.”  However, the term “clothes” is not defined in the FLSA.  As a result, courts and the U.S. Department of Labor have been unable to agree upon the meaning of “clothes.”  Now, the U.S. Supreme Court is set to resolve this split of opinion by agreeing to decide the following question:  What constitutes “changing clothes” within the meaning of section 203(o)?

This question arises from Sandifer v. United States Steel Corp. which was decided by the U.S. Court of Appeals for the Seventh Circuit.  In Sandifer, a class of 800 current and former steelworkers of U.S. Steel’s plant in Indiana filed a lawsuit claiming that the company violated the FLSA by failing to compensate them for time spent putting on and taking off their work clothes in the plant’s locker room.  The “clothes” worn by the steelworkers consisted of flame-retardant pants and jacket, gloves, boots, a hard hat, safety glasses, ear plugs and a “snood” or hood that covers the top of the head, chin and neck. 

In response to the steelworkers’ claims, the company invoked section 203(o) of the FLSA and argued that the time spent “donning and doffing” their work clothes is not compensable because the collective bargaining agreement between U.S. Steel and the steelworkers’ union does not require compensation for such time.  However, the steelworkers argued that section 203(o) is inapplicable because their work clothes do not fall within the meaning of “changing clothes” because they constitute safety equipment.  The Seventh Circuit ultimately agreed with U.S. Steel’s position in a decision written by renowned jurist Richard Posner.

In their application to the Supreme Court to review the case, the steelworkers argued that the high court needed to hear the case in order to finally resolve the split among courts over the meaning of “clothes.”  The Court of Appeals for the Fourth, Sixth, Tenth and Eleventh Circuits adopted a broad definition of “clothes,” holding that “clothes” includes anything that can be worn including accessories.  On the opposite end of the spectrum, the Court of Appeals for the Ninth Circuit, which includes California, utilizes a narrow interpretation and excludes protective gear and equipment from the meaning of “clothes” under section 203(o).  While the Seventh Circuit in Sandifer harshly criticized the Ninth Circuit’s position in Alvarez v. IBP, Inc. calling it an “outlier,” it also appears to stop short of completely adopting the broad definition of “clothes” held by other circuit courts.  For example, the Seventh Circuit acknowledged that safety glasses and ear plugs “are not clothing in the ordinary sense.”  The Supreme Court is expected to hand down its final decision in 2014. 

While the Supreme Court’s decision might have some impact on the general question of whether time spent donning and doffing work clothes is compensable, the ruling will be most significant to employers who rely on section 203(o) and collective bargaining agreements to exclude donning and doffing activities from compensable time.  Consequently, the Supreme Court’s decision may result in the Ninth Circuit’s narrow definition of “clothes” in Alvarez v. IBP, Inc. being overruled.

However, the Ninth Circuit’s holding in Bamonte v. City of Mesa that donning and doffing time for police officers is not compensable is unlikely to be affected by the Sandifer case.   In Bamonte, the Ninth Circuit held that the time police officers spend before and after their paid shifts donning and doffing their police uniforms and related protective gear (i.e., body armor and equipment belts) is not compensable work time under the FLSA so long as the officers have the option and ability to don and doff their uniform and gear off of the employer's premises.  In contrast, Section 203(o) – which was not at issue in Bamonte - excludes compensation for donning and doffing activities even when they occur on the employer’s premises so long as what is being donned and doffed constitutes “clothes.” Thus, the only impact of Sandifer will be on employers who do not give employees the option or ability to don and doff work clothes and gear off of the employer’s premises.

To Pay or Not to Pay: Legality of Unpaid Internships Is Questioned

Teamwork.jpgEmployers have for years utilized unpaid internship programs to give students and recent college graduates a chance to gain work experience.  However, since the recession began in 2008, a growing number of unpaid interns have accused their employers of exploiting them. 

There are currently several class action lawsuits working their way through the courts that seek regular and overtime pay for unpaid interns.  Two former interns sued Fox Searchlight, a film company, for failure to pay wages to unpaid interns who worked on the film “Black Swan”.  This lawsuit was recently expanded to include all unpaid interns who participated in the company’s internship program.  Hearst Corporation is also being sued by a former intern who claims she worked from 40 to 55 hours per week for Harper’s Bazaar magazine without pay.  PBS’ Charlie Rose Show recently settled a lawsuit with a group of unpaid interns for $250,000.

The unpaid interns in these lawsuits claim that their employers treated them like employees.  Consequently, the interns argue they should have been paid like employees as required by the federal Fair Labor Standards Act (“FLSA”) and state wage laws. 

While the outcome of these lawsuits remains to be seen, public employers should take this opportunity to evaluate whether their unpaid interns should be paid.  Interns are exempt from the FLSA’s minimum wage and overtime rules if the following six criteria are met:      

  1. The internship is similar to training which would be given in an educational environment;
  2. The internship experience is for the benefit of the intern;
  3. The intern does not displace regular employees, but works under close supervision of existing staff;
  4. The agency that provides the training derives no immediate advantage from the activities of the intern; and on occasion the agency’s operations may actually be impeded;
  5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
  6. The agency and the intern understand that the intern is not entitled to wages for the time spent in the internship.

These criteria boil down to a few key concerns to keep in mind when using unpaid interns.  First, interns will likely be entitled to pay if the agency uses them as substitutes for regular workers or to supplement the existing workforce.  According to the U.S. Department of Labor (“DOL”), if the agency “would have hired additional employees or required existing staff to work additional hours had the interns not performed the work, then the interns will be viewed as employees and entitled to compensation under the FLSA.” 

Second, the internship experience should be focused on teaching interns skills that can be used in multiple employment settings.  The more an internship focuses on the agency’s actual operations and teaches skills specific to the agency, the less likely that the internship will resemble an educational environment.  For example, an internship that allows interns to learn skills by “shadowing” employees is more likely to be viewed as an educational experience as opposed to an intern who performs work that benefits the agency such as assisting customers, filing or other clerical work. 

Finally, the DOL recommends that agencies limit internships to a fixed period of time.  Many agencies allow unpaid interns to work on an indefinite basis.  This would be indicative of employment.  Consequently, agencies should inform interns of the duration of the internship at the outset.

Can an Early Settlement Offer Moot an FLSA Case?

Supervisor.jpgThe U.S. Supreme Court will soon issue a decision on whether an employer’s offer to an employee of the full amount of claimed overtime pay moots that employee’s Fair Labor Standards Act (“FLSA”) case, and stops any larger scale collective action that employees and their attorneys might bring.

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 much 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.  If the case is conditionally certified, and a large number of employees opt in, the lawsuit can transform from one involving thousands of dollars into one involving millions or even tens of millions of dollars.

Some employers have adopted an approach at the outset of a case to try to “moot” the case before certification by offering to pay the individual plaintiff all the money that person claims she or he is owed including liquidated damages and attorneys’ fees.  Under long-established principles of law founded in the U.S. Constitution, federal courts cannot hear “moot” cases, i.e., ones in which the plaintiff does not actually have anything sufficiently substantial to gain by suing the defendant.  The theory here is that if the individual employee accepts the employer’s offer, the case should be over because the employee has no further claim against the employer, notwithstanding that other similarly situated employees who could assert claims in the future have not been paid.  Instead, those other employees themselves would have to come forward with their own lawsuits.  Employers have argued that the mere fact that they made the offer to satisfy the individual employee plaintiff should moot the lawsuit, even if the employee rejects the offer.

The U.S. Supreme Court will soon issue a decision that should help answer the question whether this early settlement approach by employers will be effective.  The case is Symczyk v. Genesis Healthcare.  There, after the plaintiff nurse filed her FLSA lawsuit, but before she moved to certify it as a collective action on behalf of other employees, her employer made an offer of judgment to pay the plaintiff $7,500 plus attorneys’ fees and expenses to satisfy all her claims.  The plaintiff refused to accept the offer and the District Court dismissed the case as moot, because plaintiff had been offered what she sought for herself in the lawsuit.  The U.S. Court of Appeals in Philadelphia reversed, reasoning that allowing an early offer of settlement to moot the case thwarted the purpose of the collective action procedure authorized by the FLSA.

In 2012, however, the U.S. Supreme Court agreed to hear the Genesis Healthcare appeal.  The Court heard oral argument on December 3, 2012.  The questions asked by the Justices suggest that the Court had not yet reached any consensus on how to rule.

The Justices had the following significant comments/questions:

Chief Justice Roberts asked the plaintiff’s counsel if the case could not be resolved through a sequence of individual settlements: “Why don't you just -- if somebody comes forward, just take them in, go in, you get a check for $7,500, or whatever it is, you get attorney's fees, and you can do that as often as you want?”

Justice Alito asked if the District Court could conduct a hearing to determine if the offer of judgment “actually gives the plaintiff everything that the plaintiff could possibly get under the complaint.”

Justice Kagan expressed skepticism at the mootness arguments, by describing: “[H]ere, the plaintiff's individual claims have not been fully satisfied.  She walked away with nothing.  She walked away with no judgment, and she walked away with no $7,500.  And the question is: How can it possibly be that her individual claim was moot?”

Justice Ginsburg asked:  What should happen “when you have a governing statute that says that an employee may bring suit for and [on] behalf of himself and other employees similarly situated? . . .  Mustn't you give a chance for the statutory provision to work, which you didn't.  By filing [an offer of settlement] immediately, you didn't allow the normal process of inviting opt-ins to occur.”

The full transcript of argument is at:  http://www.supremecourt.gov/oral_arguments/argument_transcripts/11-1059.pdf .

The U.S. Supreme Court’s ruling in Genesis Healthcare will likely be very significant to employer litigation strategies in FLSA cases.

Nurse's Unsuccessful FLSA Claim To Recover for Missed Meal Breaks Highlights Importance Of Having Overtime Reporting Procedures

TimeSheet.jpgThe U.S. Court of Appeals for the Sixth Circuit in Ohio recently issued a decision rejecting a nurse’s claim for compensation for missed meal breaks under the Fair Labor Standards Act (“FLSA”).  Not only is the holding in White v. Baptist Memorial Health Care Corp a victory for employers, but it underscores the importance of having reasonable policies and procedures in place for reporting all time worked including overtime.

Margaret White was an emergency room nurse for Baptist Memorial Health Care Corp.  During her employment, White was given unpaid meal breaks that were automatically deducted from her pay check.  However, White’s meal breaks were not regularly scheduled due to the nature of working in an emergency room.  Instead, meal breaks occurred as work demands allowed.

The hospital’s employee handbook provided that if an employee’s meal break was missed or interrupted because of work, the employee would be compensated for the time worked during the meal break.  Employees were also instructed to record time spent working during a meal break in an “exception log” regardless of whether the meal break was partially or entirely interrupted.  White signed a document acknowledging her understanding of this policy.  White was also familiar with the hospital’s procedures to report and correct payroll errors.  She admitted that, when she utilized these procedures, errors were handled immediately.

White initially recorded her missed or interrupted meal breaks on the exception log pursuant to the policy and was compensated for her time.  However, White also stated there were occasions she was not paid for missing a meal break.  She also said that from time to time she told her supervisors and the human resources department that she was not getting a meal break.  However, she never said that she was not compensated for missing her meal breaks.  Eventually, White stopped reporting her missed meal breaks on the exception log and did not use the procedures to correct payroll errors.  She also did not keep records of when she missed meal breaks and was not compensated for them. 

White filed a class action against Baptist alleging violations of the FLSA for failing to compensate her for working through her meal breaks.  The U.S. District Court in Memphis, Tennessee granted summary judgment in favor of the hospital and decertified the class action on the grounds that the hospital’s policy for compensating employees for missed breaks was proper under the FLSA.  White appealed the decision to the Court of Appeals where it was affirmed.

In reaching its decision, the appellate court stated that a system which automatically deducts meal times from an employee’s work hours is lawful under the FLSA.  Further, if an employer establishes a reasonable process for an employee to report uncompensated work time, the employer is not liable for non-payment under the FLSA if the employee fails to follow the established procedures.  The Court further stated that when the employee fails to follow reasonable time reporting procedures, the employee prevents the employer from “knowing its obligation to compensate the employee and thwarts the employer’s ability to comply with the FLSA.” 

With these legal principles in mind, the court found that the hospital had established policies and a system in place to pay employees for time worked during meal breaks.  The evidence also showed that White was paid for her missed meal breaks when she utilized the system, and not paid when she failed to use the system.  There was also no evidence that the hospital prevented her from using the system.  Although White occasionally told her supervisors that she was not getting a break, she never told them that she was not being compensated for missing a meal break.  Based upon these facts, the court concluded that there was no way the hospital knew or should have known that White was not being paid for her missed meal breaks.  Therefore, White’s claim was denied.

The lesson the White decision teaches employers is that they should establish, reasonable procedures for employees to report all time worked including work during meal breaks or outside of their regularly scheduled work hours.  In addition, employers should regularly publish and remind employees of these policies and procedures.  Finally, employers should discipline employees who violate the established policies and procedures.  If you need help with creating these procedures or would like to have your existing procedures reviewed by one of our attorneys, please contact our Fresno, Los Angeles, San Diego or San Francisco office. 

"Time Rounding" To Calculate Time Worked Does Not Violate California Law

Clocks 9-5.jpgA recent decision from the California Court of Appeal has upheld the entitlement of employers to “round off” the amount of employee work time to a set fraction of an hour as long as the net impact on employee compensation is neutral and there is over time an equal amount of “rounding up” and “rounding down.” This decision means time records of employee work hours do not need to be kept to the exact minute as long as the rounding off policy has a neutral effect.

Both California and federal law require that employers keep accurate time records of hours worked by hourly nonexempt employees. In earlier years time sheets or time clocks were used for this purpose. Now, in the digital, age computerized systems have come into vogue and are used to record employee work time.

See’s Candy stores used such a system, named Kronos, to keep track of employee work hours. The system used by See’s “rounded” employee work time to the nearest 1/10th of an hour. For example, if an employee scheduled to begin work at 9:00 a.m. clocked in at 9:02 a.m., the employee would be given credit as if he or she had clocked in at 9:00 a.m. However, if the employee did not clock in until 9:04 a.m. the system would treat that employee as having arrived at 9:06 a.m., 1/10th of an hour late.

The system also provided what was called a “grace period” which allowed employees to clock in up to 10 minutes early or clock out up to 10 minutes late as long as they did not actually work during those additional 10 minutes at either end of their work shift.

An employee named Silva brought a class action against See’s for unpaid wages on behalf of herself and all employees similarly situated. In this lawsuit she alleged that the “rounding” policy resulted in an inaccurate reflection of the amount of work she and her colleagues had performed and thereby deprived them of some compensation to which they were entitled. She also alleged that the rounding policy by definition was inaccurate, as the recorded times by definition were not  necessarily true to the exact numbers of minutes employees had worked. Indeed, See’s admitted as such. This admission, Silva alleged, demonstrated that See’s was violating the law by not keeping accurate time records.

See’s attempted to defend itself by alleging that the rounding policy over the course of time produced a neutral affect and therefore was a permissible method of time keeping. Silva sought to prevent See’s from defending itself on this basis and actually convinced a trial judge in San Diego that See’s should not be permitted to do so. The Court of Appeal disagreed with the lower court judge and upheld See’s ability to defend itself on this basis. (See's Candy Shops, Inc. v. The Superior Court of San Diego County (2012) 210 Cal.App.4th 88 [148 Cal.Rptr.3d 690].) See’s had actually retained an expert witness who analyzed the impact of the rounding policy and concluded that, to the contrary, the policy over time resulted in more pay to the employees than they would  have been entitled to receive had the company not used the rounding policy.

The regulations of the United States Department of Labor implementing the Fair Labor Standards Act have for years allowed a rounding policy utilizing a fixed fraction of an hour up to one quarter (15 minutes) as long as there is equal rounding up and rounding down so that over the course of time the impact on the employees is neutralized. The California Division of Labor Standards Enforcement, which implements this state’s wage and hour laws, has routinely followed the federal standard although there is nothing in California statute, regulation or case law which specifically adopts the federal rounding rule. The See’s Candy decision is the first authoritative ruling in California which validates a private company’s use of a rounding policy in this state. With more and more employers using computerized time keeping systems for keeping track of employee work hours, this ruling is welcome news. 

Overtime Pay For Off-Duty Cell Phone Calls And Text Messages? Maybe!

Person-Texting.png

The cell phone, in particular the so-called “smartphones” (e.g. iPhones, Blackberrys, Android phones) are amazing.  These devices allow us to be in contact no matter where we are on a 24/7 basis.  Some employers issue these devices to their employees both as a benefit to the employee but primarily as a benefit to the employer for the same reason: it allows contact at all hours of the day and night when necessary.

But when employees use these devices for work-related phone calls, text messages and emails while off-duty, should they be paid for this time?  This issue may be resolved in a case currently pending in the federal court in Illinois entitled Allen v. City of Chicago.

We normally do not report on a case pending in a trial court and certainly not about the ruling on a motion, which did not result in a judgment.  But this case seems of such particular significance that it merits a report.  Indeed, a number of other blogs have already commented on this case.

Here’s the situation.  The Chicago Police Department issued Blackberrys to a number of its officers including a Sergeant named Jeffrey Allen.  Sergeant Allen claims that he and other officers are required to use their Blackberrys to perform off-duty work including responding to telephone calls, emails, voicemails, and text messages.  Allen filed a purported class action lawsuit against the City alleging that he and other officers are entitled to overtime pay under the U.S. Fair Labor Standards Act for these phone based off-duty activities.  The City moved to dismiss the action but the trial court denied the motion and the matter will now proceed forward towards trial.

How this case will be resolved remains to be seen.  However, the novelty of this claim and the wide publicity the decision has received, may well result in a new cottage industry of FLSA litigation.

In order to minimize the likelihood of being the subject of such a case, the following steps are recommended:

  1. If possible, limit issuance of such devices to employees who are truly FLSA exempt and thus not entitled to overtime pay.
  2. If such phones must be issued to non-exempt hourly employees because of business necessity or operational demands, require employees to keep detailed time records of each phone related activity together with date, time of day, content description and actual duration of the call, email, text message, etc.  Be sure that the billings received from the service provider, such as AT&T, Verizon, etc., are maintained and reviewed and checked against the employee’s time reports for confirmation.  Keep in mind that FLSA requires the employer, not the employee, to keep accurate time records.  However, the employer can delegate that assignment to the employee as an additional part of their job.  Indeed, employees could be terminated for failure to keep accurate time records although they still must be paid because the employer receives the benefit of their services.
  3. If such phones must be issued to non-exempt hourly employees, limit their issuance to those who really do have a bona fide job related necessity to have them.  That is, only give phones to those hourly employees when their jobs truly require them to be available on an instantaneous basis even while off-duty.
  4. Some employees may need to have these phones while working but not while off-duty.  In these cases, issue a written policy prohibiting these employees from using their devices off-duty or institute a requirement that they reimburse the employer for personal use of the devices.  Another possibility is to require the employee to leave the phone at their job site, whereby they pick it up at the beginning of their work shift and leave it at the end.

The best advice is to develop a comprehensive written policy on the use of these devices so that employees are on clear notice of their entitlements and of their employer’s expectations of them.

LCW provides sample forms of Sample Electronic Communications Resources Policy and Authorization for Release of Information by Electronic Communications Service Provider in our Privacy Issues in the Workplace workbook for public agencies.  Additionally, LCW discusses the FLSA and strategies for complying with it in its Public Sector FLSA Compliance Guide workbook.

Keep visiting this website, as we shall update you on the progress of this case as it moves through the court system.

Photo Credit: Verizon Logo by methodshop.com, on Flickr

Employee Travel Out Of The Office - Part II

Work-Travel.pngA few weeks ago, we provided some guidelines on how to deal with employees whose jobs require them to travel away from their office during the regular work day and how to determine whether their travel time is or is not compensable.  That post dealt with situations where employees leave from and return to their homes on the same day and drive to various locations in the same metropolitan area.  How are situations handled where the employee travels out of their home city and returns on the same day?  What if the employee is required to stay out of the city overnight?

The regulations of the U.S. Department of Labor, implementing the Fair Labor Standards Act (FLSA), deal with these situations (29 C.F.R. sections 785.37 and 785.39) for hourly non-exempt employees.

What if an employee who lives and works in Los Angeles is assigned to travel to San Francisco to attend a business meeting and return home the same day?  The time the employee spends driving from home to the airport is considered non-compensable commute time.  However, compensable time begins when the employee arrives at the airport and ends when the employee returns back to and leaves the airport in Los Angeles at the end of the day.  The employee’s normal meal period, if normally “off the clock,” would also be unpaid in this situation as long as the employee is totally free from any work activities.

The same would be the case if an employee who lived and worked in San Diego was sent to Los Angeles for the day by train for a work-related activity.  The employee’s drive time from home to the train depot would be non-compensable commute time but the time from arrival at the train depot to Los Angeles and then back again to the San Diego train depot would be compensable with the exception of an unpaid meal period.

What if an employee is sent out of the City overnight?  Say for example an employee who lives and works in San Francisco is sent to Sacramento for a two-day meeting at the office of a state agency.  The employee decides to drive a personal vehicle.  The FLSA regulations do not specify how to deal with this sort of situation where the employee uses his or her own car.  The best practice would be to treat the drive time between San Francisco and Sacramento as compensable but only to the extent that it exceeds the employee’s normal commute time between home and work.  The employee’s work day would end in Sacramento whenever the meeting ends that day and the employee would remain off the clock for the balance of the day and overnight as long as he or she was totally free from any work-related activities.  The employee would go back on the clock the next morning on arriving at the meeting site and continuing until the employee arrives back in San Francisco that afternoon or evening, again netting out an unpaid meal period and the normal commute time between the employee’s regular work place and home.

These questions can be intricate and your employment law counsel should be consulted if you have any questions about how to handle employee travel time issues.  Of course, these examples only apply to hourly non-exempt employees; employees who are truly exempt as professionals, administrative or executive employees are salaried and therefore, these concerns are not applicable to them.

Department Of Labor Issues Final FLSA "Clean Up" Regulations That Highlight Important Issues For Public Employers

This guest post was authored by Brian Walter and David Urban

Yesterday, the United States Department of Labor issued a new set of final regulations interpreting various provisions of the Fair Labor Standards Act (“FLSA”).  In 2008, the DOL had proposed revisions to its regulations.  After a notice and comment period in 2008, the DOL has now issued its final regulations that take effect on May 5, 2011.  Although there are several revisions to existing DOL regulations, two are of particular interest to public sector employers.

First, the DOL conspicuously did not change the regulations regarding compensatory time off.  See 29 U.S.C. § 207(o)(5).  The DOL has previously opined that an employer must permit an employee to use comp time on the day requested unless the employer can show the use of comp time by that employee would constitute an undue disruption to its operations.  And the definition of what constitutes an undue disruption is even more onerous for public employers, especially public safety, as the DOL has opined that an employer cannot deny a request to use comp time merely because it would have to pay another employee overtime to backfill the position.  The Sixth and Seventh Circuit Courts of Appeal, have recently agreed with the DOL’s interpretation.

However, the Ninth Circuit, which covers California, and the Fifth Circuit have explicitly rejected the DOL’s interpretation of the FLSA rules for use of compensatory time off as set forth in 29 C.F.R. § 553.25 and in DOL opinions.  Both federal appellate circuits held that that an employer does not need to allow an employee to use accrued comp time on the specific day requested by the employee, but can instead honor the request by providing alternative dates within a reasonable time period after the request to use comp time is made.

Although the DOL had initially proposed changes to its regulations to bring them in line with the Ninth Circuit, the DOL changed its mind and decided to keep its existing regulations in light of the clear split in the federal appellate courts.  However, the DOL expressed its belief that its regulations, namely 29 C.F.R. § 553.25, and the Sixth and Seventh Circuit cases were the correct interpretation of the law.  The result of the DOL’s inaction is continuing confusion and threats of litigation over the use of comp time for public employers in many parts of the country that will only be resolved if the US Supreme Court decides to review the issue.  However, California public employers can breathe easier and continue to follow the Ninth Circuit’s decision in Mortensen v. County of Sacramento, which permits them to define a reasonable window of time in which an employee may use comp time instead of permitting the employee to use comp time on the specific day demanded by the employee.

The second important aspect of the new regulations is the elimination of what had been a stumbling block in analyzing whether fire protection personnel qualified for 29 U.S.C. § 207(k) work schedules of between 7 and 28 days.  The existing DOL regulations include a requirement that a public safety employee must spend no more than 20% of his or her time engaging in work that is not fire protection or law enforcement work.  The revision to section 553.212 eliminates the 20% rule for fire protection personnel, but retains the rule for law enforcement personnel.

The DOL agreed with various court decisions that the 20% rule is obsolete for fire departments in light of the 1999 amendment to the FLSA, 29 U.S.C. § 203(y), which defined who is an “employee in fire protection activities.”  Section 203(y) requires a fire department employee who is trained in fire suppression to have “responsibility” and “legal authority” to engage in fire suppression, but not does not require that the employee actually fight fires or engage in related activities for any particular percentage of time in order to qualify.  Since medical work is a fire protection activity if performed by a trained firefighter, perpetuation of the 20% rule caused confusion and unnecessary litigation over who qualified for a 7(k) work period, as fire departments have evolved so that often a majority of the calls received are medical in nature.  Although the 20% rule has been eliminated for fire protection personnel, public agencies must still ensure that law enforcement personnel do not spend more than 20% of their time performing non-law enforcement activities. 

Employee Travel Out Of The Office: How Must You Pay For It?

We get questions . . .

Business-Travel.JPGRecently a client called with this dilemma.  One of its employees, an hourly non-exempt employee, is required to travel during the working day to locations away from the main office.  Sometimes, the employee goes directly to an offsite location from home at the beginning of the day.  On other occasions, the employee returns directly home after an appointment without coming back to the office.  On yet other occasions, the employee comes to the office before leaving for the first appointment or returns to the office from the last appointment of the day before going home.

The employee has claimed an entitlement to be paid for travel time between home and these offsite locations even though the employee acknowledges that no pay is required for the time the employee spends driving between home and office.

The general rule is that employee commute time between home and work is not compensable work.  Drive time directly between home and a work related assignment within the same day and within the same city or area is commute time even if the employee does not first go to the office or return to the office before going home.  This is made clear in regulations of the United States Department of Labor under the Fair Labor Standards Act.  29 C.F.R. section 785.38.

In the situation raised by the client, the employee lived more than an hour away from the office.  Often times the employee was assigned to go to an offsite location first thing in the morning that was equally as far away from home as the office.  Nonetheless, the employee claimed pay for the travel to the offsite location even though pay was not claimed for regular commute to the office.  We advised that the employer is not required to pay for this travel time based upon the clear language of the federal regulation.  However, if the employee was required to report to the office first before leaving for the appointment, the employee would go “on the clock” on arrival at the office and then the drive time between the office and the appointment would be compensable.  The same would be true at the end of the work day if the employee returned from an appointment to the office before going home.  The drive time back to the office would be compensable but the commute back to the employee’s home would not be.

A separate set of rules applies if the employee is required to travel out of the city, especially if the business trip requires an overnight stay.  That subject will be dealt with in these pages by a later post.

Oral Complaints Of FLSA Violations Protected Against Retaliation; But Oral Complaints To Whom?

The United States Supreme Court’s recent decision in Kasten v. Saint-Gobain Performance Plastics, Corp. makes clear that an employee need not make a written complaint, but can make an oral complaint, in order to be protected against retaliation for filing a complaint regarding violations of the Fair Labor Standards Act (FLSA).  However, did the Supreme Court answer the question,

to whom does the oral complaint have to be made in order to be protected?

Punching-Timecard.pngKevin Kasten worked at Saint-Gobain’s factory where employees were required to enter a changing room to put on protective gear before they could proceed to the next room where they could clock-in. Kasten verbally complained to his supervisors and human resources that it was illegal for the time clocks to be where they were located because it precluded the workers from being compensated for their time spent donning their protective gear and if challenged in court, the company would “lose.”  The company later disciplined and then terminated Kasten which he alleged was in retaliation for his verbal complaints.

Kasten brought an action against Saint-Gobain and the federal district court found that the company violated FLSA by placing time clocks in a location that prevented workers from receiving credit for the time they spent donning and doffing work-related protective gear. Kasten also brought a claim for retaliation in violation of the FLSA.  Both the district court and the Seventh Circuit Court of Appeals found that the FLSA did not protect verbal complaints. 

The FLSA’s anti-retaliation provision forbids employers from discharging or otherwise discriminating “against any employee because such employee has filed any complaint.”  The Supreme Court reversed the lower courts, finding that FLSA was intended to protect the “filing” of oral complaints, just as much as written ones. 

The Supreme Court further stated that the phrase, “filed any complaint” “contemplates some degree of formality to the point where the recipient has been given fair notice that a grievance has been lodged and does, or should, reasonably understand the matter as part of its business concerns.”

Curiously, though the Court said it did not need to decide whether an oral complaint is protected if it is made only to the employer, rather than to a governmental agency, stating the issue had not been raised in Saint-Gobain’s briefing and was not otherwise a necessary predicate to determining the verbal versus written debate.

In the dissent, Justice Scalia noted that the Court’s majority opinion necessarily implies that the complaint, whether written or oral, may be to the employer, rather than a regulatory governmental agency.  “Surely the word ‘complaint’ in this question must be assigned an implied addressee. It presumably does not include a complaint to Judge Judy.  And the only plausible addressee, given the facts of this case, is the employer.”

Nevertheless, this decision did not make an express finding whether complaints to an employer, rather than to a regulatory governmental agency, are protected against retaliation under the FLSA.