It might sometimes seem from the parade of headline-grabbing, employee-favoring court decisions that employers are destined to lose in so-called "off-the-clock" cases under the federal Fair Labor Standards Act.  These lawsuits involve claims by non-exempt employees that the employer has failed to pay the FLSA-required wages for work that went unrecorded.  But a ruling by the Tenth Circuit U.S. Court of Appeals (with jurisdiction over Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming) in Brown v. ScriptPro shows that, with the right policies, systems, and practices in place, it is possible for an employer to prevail.

The Good News . . .

Brown claimed that he was entitled to overtime compensation for work he performed at home.  However, he produced no evidence of the amount and extent of this work, including that he did not record any of it in ScriptPro's timekeeping system, which he could have accessed from home.  ScriptPro required employees to record all worktime, and apparently it enforced this requirement.

The court ruled that Brown had no FLSA claim.  In the court's view:

◊   ScriptPro kept accurate records of employees' hours worked;

◊   Brown could have recorded his work in ScriptPro's system, but he did not;

◊   Brown had kept no other records to document the amount of time he worked; and

◊   Brown did not otherwise carry his burden to demonstrate as a matter of just and reasonable inference how much time he claimed to have worked.

. . . But Keep It In Perspective

The soundbite point drawing attention to this case in the news is the court's statement that, "where the employee fails to notify the employer through the established overtime record-keeping system, the failure to pay overtime is not a FLSA violation."  However, the court's lead-in qualifier for that statement was, "[u]nder these circumstances".  Had there been a dispute about whether ScriptPro kept accurate time records, for example, the result might have been different.

Employers should not assume that courts will decide this way no matter what the situation is, or that meeting their FLSA timekeeping obligations is simply a "set it and forget it" matter of publishing a policy.  Instead, the prospects for a positive outcome will be improved by:

♦   Determining all the activities that count as FLSA "hours worked";

♦   Developing systems and policies for accurately capturing all such worktime;

♦   Communicating those systems and policies to the employees;

♦   Requiring managers and supervisors to enforce those systems and policies; and

♦   Monitoring time records to evaluate whether they are accurate.

Brown v. ScriptPro represents a sound, commonsense result on a particularly good set of facts for the employer.  Other employers would be wise to do all they reasonably can to see that their circumstances will be similarly favorable if there is an off-the-clock claim.

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For many years, some employers have chosen to "round" non-exempt employees' time entries in computing their wages.  News items in recent days have reported on a California appellate court's ruling in See's Candy Shops, Inc. v. Superior Court and Silva that a properly administered "rounding" practice does not violate California wage-hour law.

This is of course good news for California employers, and to some extent for employers across the nation (See's Candy is not binding precedent outside of California or under the federal Fair Labor Standards Act).  Nevertheless, management should not take it as a foregone conclusion that "rounding" worktime is beyond dispute in every situation.

It is first necessary to attach a common understanding to the term "rounding", because the word is used to describe a multitude of different practices.  This can be done with reference to the U.S. Labor Department's enforcement policy that played a central role in See's Candy.  USDOL says that, under the FLSA, it will not challenge an employer's practice of rounding a worker's starting and stopping times to the nearest 5 minutes or to the nearest tenth or quarter of an hour in calculating his or her pay, assuming that the practice "averages out over a period of time" such that employees are properly paid for all of their worktime.  See, e.g., 29 C.F.R. § 785.48(b).

USDOL appears to mean that rounding should result in an employee's being credited with at least as much time as he or she has actually worked over the long-term.  Consequently, the ultimate question under USDOL's approach gets down to the impact of such a policy or practice:  If rounding does not result in a failure to pay the legally-required wages in the long run, then its effect is not unlawful under the FLSA.  Given the uncertainty that USDOL embraces in using a phrase like "averages out" and the imprecision surrounding what "period of time" might be appropriate for judging this, evaluating rounding's effect might reasonably be viewed as a question of probability, rather than exactitude:  Is it probable that the employer's practice will, over time, capture and properly compensate at least as much time as the employee actually works?

See's Candy underscores that rounding is emerging as yet another source of potential wage-hour claims.  However, the case also supports the view that there is nothing inherently unlawful about rounding worktime consistently with USDOL's policy.  Even so, it is likely to be a while before a court consensus emerges to refine the parameters of the principles and considerations underlying USDOL's policy.  And, as always, an employer should continue to take into account whether and how state or local laws address rounding under their own wage-hour requirements.
 

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In thinking-through and implementing their recovery plans in the wake of Hurricane Sandy, employers will want to review our August post summarizing a number of federal Fair Labor Standards Act issues that typically arise following a natural disaster.

Readers will recall our typical reminder that the requirements and limitations of other laws must also be taken into account.  This is especially important where Sandy's impact is concerned, because the laws and regulations of some jurisdictions in the hardest-hit areas are often different and/or much tougher on employers than the FLSA is.

As just one example, New Jersey law provides, "No employer shall terminate, dismiss or suspend an employee who fails to report for work at his or her place of employment because he or she is serving as a volunteer emergency responder during a state of emergency declared by the President of the United States or the Governor of this state or is actively engaged in responding to an emergency alarm . . .," subject to certain notices and verifications.  This law does not require an employer to pay for the time missed (although treating some such time as unpaid might create problems under other requirements, such as the "salary basis" principles applying to certain exemptions under the FLSA), but it does say that "a volunteer emergency responder may charge his or her absence as a vacation day or a sick day, if the volunteer has such days available."  N.J. Stat. Ann. § 40A:14-214 (link to reproduction below).

The important take-away is that employers should be sure to consider all of the relevant directives and prohibitions as they decide how to proceed.  Haste and conventional wisdom could lead to trouble down the road.

 N.J. Volunteer Responder Statute.pdf (17.01 kb)

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Recurring wage-hour issues tend to arise during the recovery from a natural disaster.  We posted the following item last year in connection with Hurricane Irene, and the points are equally relevant this time around:

*     *     *

Affected employers will no doubt have a variety of wage-hour questions in the aftermath of Hurricane Irene.  The number and scope of the issues raised might well be practically endless.  In this post, we address in very general ways the federal Fair Labor Standards Act topics that experience suggests will be among the most-pressing.

◊   What do we do about lost time records for work already performed but not yet paid?

If the only records of hours worked are lost or unusable, then there is no perfect solution.  Re-create the most accurate accounting you can under the circumstances.  Perhaps the preferred approach is to ask each employee to make the best-possible estimate of his or her hours worked. You should obtain the employee's written acknowledgement of his or her best recollection and should include the employee's authorization allowing later corrections in worktime and pay should more accurate hours-worked information become available.

◊   How do we track employees' worktime without our electronic/computerized time clocks?

Employees may record all hours worked by using handwritten timesheets.  To ensure accuracy, each employee should enter his or her own time and should record the actual times when the employee's work starts and stops each workday.

◊   As we recover, must we keep paying overtime on top of our other burdens?

At this time, there is no FLSA "emergency" exception that relieves the obligation to pay FLSA-required wages.  Employees subject to the FLSA's overtime provision must receive overtime premium at a rate of at least 1.5 times their regular rates of pay for all hours worked over 40 in the designated seven-day workweek.

If employees are covered by a collective bargaining agreement, it might contain additional overtime provisions requiring more than the FLSA does.  Perhaps the terms of the agreement relax those requirements in emergencies.  However, a collective bargaining agreement cannot override the FLSA's requirements.

◊   Can an employee volunteer to perform recovery services for us without pay?

The FLSA does not permit employees to "volunteer" unpaid time to the employer under any but the narrowest of circumstances.  For example, if a manufacturing facility sets up a hotline or makes other arrangements to provide a clearinghouse for information about the status of the workplace and employee reporting times, non-exempt employees volunteering to perform such services are engaged in compensable hours worked for FLSA purposes.  Employers considering any kind of unpaid "volunteer" services by their employees should evaluate the legality of doing this carefully and in advance.

◊   Must we keep paying employees who are not working?

Under the FLSA, for the most part the answer is "no".  FLSA minimum-wage and overtime requirements attach to hours worked, so employees who are not working are typically not entitled to the wages the FLSA requires.

One possible FLSA-related exception is for employees treated as FLSA-exempt whose exempt status requires that they be paid on a "salary basis".  Generally speaking, if such an employee performs at least some work in the designated seven-day workweek, the "salary basis" rules require that he or she be paid the entire salary for that particular workweek.  There can be exceptions here, too, such as might sometimes be the case where the employer is open for business but the employee decides to stay home for the day.

Also, non-exempt employees paid on a "fluctuating-workweek" basis under the FLSA normally must be paid their full fluctuating-workweek salaries for every workweek in which they perform any work.  There are a few exceptions, but these are even more-limited than the ones for exempt "salary basis" employees.

Of course, an employer might have a legal obligation to keep paying employees because of, for instance, an employment contract, a collective bargaining contract, or some policy or practice that is enforceable as a contract or under a state wage law.

◊   What can we do about charging missed time to vacation and leave balances?

The FLSA generally does not regulate the accumulation and use of vacation and leave.  The "salary basis" requirements for certain FLSA-exempt employees can implicate time-off allotments under various circumstances, some guidance on which the U.S. Labor Department has provided in opinion letters accessible here and here.

Again, however, what an employer may, must, or cannot do where paid leave is concerned might be affected by an employment contract, a collective bargaining contract, or some policy or practice that is enforceable as a contract or under a state wage law.

◊   When is travel time "hours worked" for purposes of computing FLSA wages due?

FLSA travel-time "rules" are not seamless, up-to-date, or necessarily logical or consistent with common sense.  The best-known ones are that:

•   Normal commuting between home and work typically is not considered to be hours worked, and

•   Travel between one assignment and another during a workday typically is hours worked.

However, even these principles are subject to exceptions and elaboration.  The best starting point is to consider each scenario an employer faces under the U.S. Labor Department's basic interpretations on travel time.  They are compiled at 29 C.F.R. §§ 785.33-785.41 and may be accessed here.

Remember that other requirements, such as those applying to government contractors or subcontractors and those of states or other jurisdictions, can also be relevant to these questions.

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The best answer to last week's Quick Quiz is, "No", it is not likely that Alan's time between calls would be found to be worktime under the federal Fair Labor Standards Act.

The idle time during which an otherwise off-duty employee is available to be called upon to do something might or might not be compensable FLSA "hours worked", depending upon the situation.  Generally, the question is whether this idle time while "on call" is spent predominantly for the employer's benefit as opposed to the employee's.  The answer usually turns upon the extent to which the employee is able to use the time effectively for personal purposes.

What Are The Important Factors?

The U.S. Labor Department and the courts say that this determination requires an evaluation of all the relevant facts.  Among the things often considered are whether:

♦   The employer requires the employee to remain on the employer's premises;

♦   The employer requires the employee to wait at home for calls or messages or confines the employee to an excessively-restricted geographical area;

♦   The employee receives numerous, frequent, and/or lengthy work assignments during the on-call period;

♦   The employee must respond within a short timeframe under the circumstances (especially if the employee must travel somewhere to do the work);

♦   The employer requires the employee to be on-call frequently, never relieves the employee from on-call status, does not permit the employee to exchange calls or call periods with another worker, or does not allow the employee to turn down at least some calls;

♦   There is an agreement or understanding covering the arrangement (although an employee may not agree to anything that violates the FLSA).

Ordinarily, some combination of restrictive factors is present when idle on-call time is found to be compensable work.

But the time need not be free from any restrictions whatsoever.  For example, courts have found these periods not to be worktime even though the employer required the employee to remain sober and not to take any mind-altering drugs, or to stay well-groomed and appropriately dressed.  Neither is it necessary for the employee to be able to engage in literally any personal activity he or she might wish.

So What About Alan's Situation?

Alan is on-call only for seven days a month, and only for six hours on each on-call day.  He need only phone within 30 minutes after receiving a message, rather than physically report somewhere within that time.  He averages far less than one duty-message per on-call day and spends roughly 5% to 7% of his on-call period performing work.  Although he cannot drink alcohol and must stay in the area, these restrictions standing alone do not mean that he is unable to use the on-call time for a wide variety of personal purposes.  It is probable that a decisionmaker would not see these particular circumstances as causing Alan's idle on-call time to be FLSA "hours worked".

Of course, the predominant-benefit question is necessarily fact-specific.  Therefore, each situation should be separately evaluated.

And Don't Forget . . .

States and other jurisdictions might have "on call" rules that are tougher on employers than the FLSA is.  Employers should look at every applicable wage-hour law to find out whether this is the case.

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Alan is a Help Desk Associate for The Big Corporation.  He is subject to the federal Fair Labor Standards Act's minimum-wage, overtime, and timekeeping requirements.

Alan normally works from 8 a.m. until 4 p.m., Tuesday through Saturday.  Once each calendar month, Alan is on-call between 5 p.m. and 11 p.m. each day for a seven-day period.

He has to call-in within 30 minutes after receiving an e-mail on his cellphone.  While he is on-call, he cannot drink alcoholic beverages, and he cannot leave the metropolitan area in which he lives.  Typically, Alan receives two or three messages in a seven-day on-call period and spends about an hour dealing with each problem that prompted the e-mails he received.  He accurately records all of the time he spends handling those problems, and his employer pays him properly under the FLSA for this worktime.

But what about the remaining time for which Alan is on-call?  Is it likely that his idle time between calls will be deemed to be FLSA "hours worked"?

Many employers find nowadays that at least some workers are unable to read, write, or do simple arithmetic beyond the lowest levels (if at all).  Management wants to give the employees mandatory training in these areas, but not if that means incurring overtime costs when the instructional time causes the employees' hours worked to exceed 40 in a workweek.  But, under the right circumstances, there is a little-known way to increase employees' basic academic abilities without having to pay FLSA overtime premium for the time they spend learning.

The General FLSA Training Rules

The U.S. Labor Department (DOL) says that time spent in employer training generally must be considered compensable work, unless four criteria are met.  That is, the training time has to be added together with the employee's other hours worked (including for overtime-pay purposes), except where:

♦   The employee's attendance is truly voluntary;

♦   The employee's attendance is outside his or her regular working hours;

♦   The training is not directly related to the employee 's current job; and

♦   The employee performs no productive work during attendance.

29 C.F.R. § 785.27.  Where remedial education is concerned, an employer offering the instruction typically wants to require employees to undergo it.  Also, it is often necessary to schedule the classes at some point during the employee's normal workday.

The Section 7(q) Overtime Exception

The FLSA's Section 7(q) (link to reproduction below) allows the employer to pay for up to ten overtime hours of qualifying instruction at the employee's straight-time regular rate of pay.  In creating this exception, Congress wanted to encourage employers to help provide the fundamental educational background some employees need to succeed in the job market, both now and in the future.  The exception is therefore available for certain basic education offered to employees who lack a high-school diploma or educational attainment at the eighth-grade level.  The training provided cannot be job-specific.

DOL says that the remedial training must be designed to provide reading and other basic skills at an eighth-grade level or below, or to fulfill the requirements for a high-school diploma or a General Educational Development ("G.E.D.") certificate.  29 C.F.R. § 778.603.  Also, DOL rules state that the training has to occur during discrete periods of time set aside for it and must be conducted away from the employee's work station "to the maximum extent practicable".  Id.  DOL regulations require employers to keep accurate records of both an employee's time spent in the remedial education each workday and each workweek and the compensation the employee is paid for this time.  29 C.F.R. § 516.34.

Don't Forget Other Overtime Laws

Of course, the Section 7(q) exception does not override overtime obligations imposed by any different federal law or by any other jurisdiction's requirements.  An employer considering a remedial-training program designed around Section 7(q) should carefully evaluate whether the program will meet the requirements of all other applicable overtime provisions.

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 FLSA Section 7q.pdf (14.69 kb)

The answer to our September 23 Quick Quiz is, "None of it".

The relevant question under the federal Fair Labor Standards Act gets down to whether Ellen was "engaged to wait" (which is compensable worktime) or was "waiting to be engaged" (which is not).  There is not always an obvious answer to whether this kind of time is or is not compensable work under the FLSA.  As the U.S. Labor Department puts it, "Whether waiting time is time worked under the [FLSA] depends upon [the] particular circumstances."  29 C.F.R. § 785.14.

The Labor Department says that an employee is often "engaged to wait" even during periods of inactivity when he or she can leave the premises, because these periods of time are typically unpredictable and of short duration and do not permit the person to use the time effectively for his or her own purposes.  According to the Labor Department, in these situations, the waiting periods are an integral part of the job so as to be compensable worktime.  See, e.g., 29 C.F.R. § 785.15.

On the other hand, the Labor Department has also said that an employee's waiting time might not be hours worked in situations in which the employee:

◊   Is completely relieved of all duties and responsibilities;

◊   Is told in advance that he or she is permitted to leave the job;

◊   Is told in advance that work will not resume until a specified time; and

◊   Has a long-enough time to use the period effectively for his or her own purposes.

See, e.g., 29 C.F.R. § 785.16.(a).  Once again, though, whether the amount of time involved is of a sufficient length "depends upon all the facts and circumstances .  .  .."  Id.

In our hypothetical scenario, the best answer is that Ellen is "waiting to be engaged" between 8:45 p.m. Sunday and 7 a.m. Monday.  She has no duties or responsibilities during that period; she performs no work during that time; she knows she is not required to be at the booth until 7 a.m. on Monday; and clearly the period is long enough for her to use it for her own, personal purposes.  The fact that she is out-of-town is not enough in itself to cause that period of time to count as FLSA "hours worked".

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Ellen is a non-exempt employee who works in Bigtown for The Acme Corporation.  She is assigned to hand-out brochures at TAC's booth at a tradeshow at a hotel in Salestown on Monday.  She will stay in the same hotel where the show will be held.  Her instructions are that she has to be at the booth location beginning at 7 a.m. on Monday, when she will help set up the booth.

She arrives at the Salestown hotel on Sunday night at 8:45 p.m.  She immediately goes to dinner until 10:15 p.m.  She then returns to her hotel room, reads a novel for a while, and goes to sleep.

She wakes up at 6 a.m., goes through her normal "get ready" routine, eats a quick breakfast downstairs, and reports to the booth location at exactly 7 a.m.

Under the federal Fair Labor Standards Act, how much of Ellen's time between 8:45 p.m. Sunday and 7 a.m. Monday is worktime?

Please use the poll buttons to the right to register your answer.

Affected employers will no doubt have a variety of wage-hour questions in the aftermath of Hurricane Irene.  The number and scope of the issues raised might well be practically endless.  In this post, we address in very general ways the federal Fair Labor Standards Act topics that experience suggests will be among the most-pressing.

◊   What do we do about lost time records for work already performed but not yet paid?

If the only records of hours worked are lost or unusable, then there is no perfect solution.  Re-create the most accurate accounting you can under the circumstances.  Perhaps the preferred approach is to ask each employee to make the best-possible estimate of his or her hours worked. You should obtain the employee's written acknowledgement of his or her best recollection and should include the employee's authorization allowing later corrections in worktime and pay should more accurate hours-worked information become available.

◊   How do we track employees' worktime without our electronic/computerized time clocks?

Employees may record all hours worked by using handwritten timesheets.  To ensure accuracy, each employee should enter his or her own time and should record the actual times when the employee's work starts and stops each workday.

◊   As we recover, must we keep paying overtime on top of our other burdens?

At this time, there is no FLSA "emergency" exception that relieves the obligation to pay FLSA-required wages.  Employees subject to the FLSA's overtime provision must receive overtime premium at a rate of at least 1.5 times their regular rates of pay for all hours worked over 40 in the designated seven-day workweek.

If employees are covered by a collective bargaining agreement, it might contain additional overtime provisions requiring more than the FLSA does.  Perhaps the terms of the agreement relax those requirements in emergencies.  However, a collective bargaining agreement cannot override the FLSA's requirements.

◊   Can an employee volunteer to perform recovery services for us without pay?

The FLSA does not permit employees to "volunteer" unpaid time to the employer under any but the narrowest of circumstances.  For example, if a manufacturing facility sets up a hotline or makes other arrangements to provide a clearinghouse for information about the status of the workplace and employee reporting times, non-exempt employees volunteering to perform such services are engaged in compensable hours worked for FLSA purposes.  Employers considering any kind of unpaid "volunteer" services by their employees should evaluate the legality of doing this carefully and in advance.

◊   Must we keep paying employees who are not working?

Under the FLSA, for the most part the answer is "no".  FLSA minimum-wage and overtime requirements attach to hours worked, so employees who are not working are typically not entitled to the wages the FLSA requires.

One possible FLSA-related exception is for employees treated as FLSA-exempt whose exempt status requires that they be paid on a "salary basis".  Generally speaking, if such an employee performs at least some work in the designated seven-day workweek, the "salary basis" rules require that he or she be paid the entire salary for that particular workweek.  There can be exceptions here, too, such as might sometimes be the case where the employer is open for business but the employee decides to stay home for the day.

Also, non-exempt employees paid on a "fluctuating-workweek" basis under the FLSA normally must be paid their full fluctuating-workweek salaries for every workweek in which they perform any work.  There are a few exceptions, but these are even more-limited than the ones for exempt "salary basis" employees.

Of course, an employer might have a legal obligation to keep paying employees because of, for instance, an employment contract, a collective bargaining contract, or some policy or practice that is enforceable as a contract or under a state wage law.

◊   What can we do about charging missed time to vacation and leave balances?

The FLSA generally does not regulate the accumulation and use of vacation and leave.  The "salary basis" requirements for certain FLSA-exempt employees can implicate time-off allotments under various circumstances, some guidance on which the U.S. Labor Department has provided in opinion letters accessible here and here.

Again, however, what an employer may, must, or cannot do where paid leave is concerned might be affected by an employment contract, a collective bargaining contract, or some policy or practice that is enforceable as a contract or under a state wage law.

◊   When is travel time "hours worked" for purposes of computing FLSA wages due?

FLSA travel-time "rules" are not seamless, up-to-date, or necessarily logical or consistent with common sense.  The best-known ones are that:

•   Normal commuting between home and work typically is not considered to be hours worked, and

•   Travel between one assignment and another during a workday typically is hours worked.

However, even these principles are subject to exceptions and elaboration.  The best starting point is to consider each scenario an employer faces under the U.S. Labor Department's basic interpretations on travel time.  They are compiled at 29 C.F.R. §§ 785.33-785.41 and may be accessed here.

________________

Remember that other requirements, such as those applying to government contractors or subcontractors and those of states or other jurisdictions, can also be relevant to these questions.

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