February 5 Tip of the Week

“Compensable Time in the Electronic Age”

Employers of hourly, non-exempt workers have often struggled with the question of what constitutes compensable time for which employees must be paid.  The Fair Labor Standards Act defines compensable time as time where an employer “suffers or permits an individual to work.”  Over the years, questions have arisen regarding whether the employee who arrives at work early to turn on the copier and brew the coffee needs to be paid for that time or whether those are voluntary activities that do not require compensation.  Questions have also arisen as to whether the putting on of protective equipment at the beginning of a work shift is compensable work time.  In today’s more complicated workplace, where workers are working remotely and communicating with customers and clients via computers and telephones, rather than in person, new questions have arisen as to what constitute compensable work time. 

A recent 9th Circuit Court of Appeals case, Cadena v. Customer Connexx, LLC., No. 21-16522 (October 24, 2022) overturned a lower court’s grant of summary judgment to an employer that addressed whether the time spent in booting up and shutting down computers constituted work time.  The employees in question worked remotely for a call center that handled the scheduling of appointments with customers for pick up of recycled appliances.  Each employee was assigned a work computer to use in their home and each employee was required to account for all time worked using a company-provided electronic time keeping system using their work computers.  According to the employees, the time it took for their computers to boot up at the beginning of their work day and to shut down at the end of the day varied, but the range was between 6.8 and 12.1 minutes for boot up time and 4.75 and 7.75 minutes to log out and shut down the computer. 

The employees sued their employer under the Fair Labor Standards Act, alleging that they were not being paid for all their time worked in violation of the overtime requirements in federal and state law.  The employer filed a motion for summary judgment on the basis that the booting up and shutting down of the computers was not part of the “principal activities” of the employees and were, therefore, not compensable.  The lower court granted the employer’s summary judgment motion and the plaintiffs appealed arguing that the turning on and shutting down of their computers are integral to their principal activities.  In overturning the lower court’s decision, the appeals court noted that, although the law does recognize preliminary activities that are not compensable, the booting up of an employer-issued computer which is necessary in order to perform the employee’s duties does not meet the requirements for a non-compensable preliminary activity.  The court determined that the turning on of the computer, through which the employee communicated with clients and performed their job duties, was an integral and indispensable part of the job and constituted time worked under the Fair Labor Standards Act. 

Connexx raised two other grounds to support the lower court’s grant of summary judgment.  The first was that the time spent turning on the computer should be deemed “de minimis” and, as such, does not require payment.  The “de minimis” rule has been applied to situations where it is found that the time spent in a certain activity is so small or insubstantial it need not be considered work time.  The second argument raised by Connexx was that they were not aware of the time spent by employees because the employees did not report that time to them and, therefore, they could not be held responsible for paying for that undeclared time.  Connexx argued that the employees’ failure to report additional work time excused them from paying for that time.  Although the court declined to rule on either of these arguments, it did note that the law does require employers to pay for work that the employer knew or “had reason to believe” was being performed even when that work was being performed at home. 

Why is this case important?  In today’s move toward a more remote and flexible workforce, this case raises additional compliance and liability issues that employers face when they have less control over the employee’s workplace.  The wage and hour laws are often interpreted in favor of employees and when employees allege that have worked additional hours that the employer did not acknowledge or pay them for, the employer must be able to disprove these claims.  When an employee is working from home or responding to emails and other business-related communications on a smart phone or a computer, whether company-issued or a personal device, employers are vulnerable to wage and hour claims.  These claims generally involve overtime and can be very expensive both to defend and to settle. 

MyHRcounsel can assist you in navigating the difficult compliance issues in the workplace -whether it be remote or in person.  Well-written and legally compliant policies are the first step to minimizing your liability in these situations and are available through our handbook service.  In addition, if issues arise, our AskHR service provides you access to legal advice from our labor and employment law attorneys on how to respond to those issues.