Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

Courts continue to analyze the compensability of preliminary and postliminary time: time spent before or after a non-exempt employee’s shift on certain tasks related to the performance of the employee’s job. Many suits allege the time spent “donning and doffing” of personal protective equipment (“PPE”) related to dangerous work environments (slaughter houses, power plants, etc.) must be compensated as being “integral and indispensible” to the performance of the jobs in question. In a recent opinion, while Magistrate Judge George H. Lowe of the Northern District of New York observed that this legal issue has “troubled courts for more than sixty years,” the Court ultimately determined that former employees of the Massena West aluminum smelting facility operated by Alcoa were not entitled to compensation for time spent putting on and removing “flame retardant shirts and pants, metatarsal (or steel-toed) boots, spats, hard hats with snoods that cover the back of the neck, and safety glasses.” Adams v. Alcoa, Inc., 2011 U.S. Dist. LEXIS 110718 (N.D.N.Y Sept. 27, 2011)

The Adams plaintiffs worked in the potroom and ingot departments of the plant, jobs which required them to be near molten metal and wear the flame retardant shirts and pants, steel-toed boots, spats and hard hats. Alcoa provided the Plaintiffs with extra uniforms, laundered those uniforms, and permitted employees to don/doff the uniforms at home, or in a facility at Massena West. Magistrate Judge Lowe, relying on the Second Circuit’s “extremely narrow” interpretation of the “integral and indispensable” requirement in a factually similar case, along with a Department of Labor advisory memorandum addressing when donning and doffing time is compensable, ruled that the time spent by Plaintiffs putting on PPE was neither “integral” (which required that PPE be necessary to enter a “lethal atmosphere”) nor “indispensable” (which, under the DOL guidance, required that the donning and doffing by necessity occur on premises, not at home). Id. at * 16-27 citing Gorman v. Consolidated Edison Corp., 488 F.3d 586 (2d Cir. 2007). 

The scope of the compensable workday for non-exempt employees is a legal concept that is devoid of clairty, and DOL and court guidance on the issue has not always been consistent. Employers must assess what state and federal law require in their jurisdictions with respect to the compensability of all tasks performed by the employee at the employer’s behest.

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While this space frequently discusses decisions adjudicating the merits of FLSA plaintiffs’ “off-the-clock” claims, allegations that employees were not compensated for all hours worked, FLSA collective action litigation often does not reach this merits stage of the proceeding. Frequently, courts first review plaintiffs’ claims in the context of determining whether FLSA plaintiffs are “similarly situated” – an elusive and difficult two-stage inquiry. Recently, a federal district court in Pennsylvania analyzed whether a group of some 700+ opt-in plaintiffs in a putative collective action brought against funeral home operator Alderwoods Group were similarly situated. The Court held that they were not. Prise v. Alderwoods Group, 2011 U.S. Dist. LEXIS 101817 (W.D. Pa. Sept. 9, 2011).

Prise concerned claims brought by the named plaintiffs that they, and individuals holding a variety of other non-exempt job titles at defendant’s funeral homes, were not paid for time relating to: “(a) community work; (b) on-call work; (c) overtime preapproval; (d) training for insurance licenses; and, (e) meal breaks.” Id. at * 5.

In analyzing whether all 700 opt-in plaintiffs’ were similarly situated at the second, more stringent stage of the collective action process, the Court reviewed extensive record testimony from numerous plaintiffs across a number of states regarding the similarities and differences in the application of the allegedly “uniform” FLSA policies used by Defendant. This review constituted the required “fact specific review of each class member who has opted-in, taking into account factors such as employment setting, termination procedures, defenses asserted against various plaintiffs, and other procedural issues.” Id. at * 55. This analysis allows the court to consider “1. disparate factual in employment settings of the individual plaintiffs; 2. the various defenses available to defendant which appear to be individual to each plaintiff; and, 3. fairness and procedural considerations.” Id. citing Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1103 (10th Cir. 2001). 

Under this test, the court concluded, particularly in light of recent Western District of Pennsylvania authority as well as the denial of class certification of similar claims in a California lawsuit against the same Defendant, that “each of the factors reviewed for the classes supports decertification…because [plaintiffs] did not set forth substantial evidence that the opt-in plaintiffs are similarly situated to the named plaintiffs. Testimony from sample plaintiffs and management in each class were inconsistent regarding [Defendant’s] compensation practice.” Id at * 86-87.

Prise represents a victory for employers, as the court required the plaintiff to not merely allege a common policy applicable to a broad class of employees, but to adduce evidence through the discovery process supporting such an allegation in order to proceed to trial on a collective action basis. Where plaintiffs failed to do so, the court determined that they could not proceed collectively. Collective action litigation continues to be costly and complex, and employers must continue to take risk management steps to minimize their exposure to FLSA claims, particularly broad collective actions.  

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The ubiquity of class and collective action lawsuits under the FLSA and state wage and hour laws requires employers to remain ever vigilant with respect to their wage practices. The ferocity of the plaintiffs’ bar is such that even seemingly settled FLSA doctrine is subject to attack. Recently, a federal district court in Illinois rejected one such attack. Brown v. Lululemon Athletica, Inc., 2011 U.S. Dist. LEXIS 18217 (N.D. Ill. Feb. 24, 2011). 

Lululemon concerned typical “off-the-clock” allegations, namely that the plaintiff sales clerk for the Defendant exercise apparel retailer was required to put in extra hours of work performing tasks for which she was not compensated but which Plaintiff alleged were all for the employer’s benefit and thus, compensable time. However, plaintiff did not allege that such activities pushed her over the statutory threshold for overtime of 40 hours in a workweek, or that by adding such unpaid hours to her total hours worked her rate of pay (as measured by her compensation divided by hours worked) fell below the minimum wage. Rather, plaintiff sought compensation for this as “gap time”, the time between her paid hours of work (which were under 40) and her actual hours of work based on these additional tasks (which were greater, but also under 40). 

Collecting more than a dozen cases from around the country (including a number of appellate decisions), the court rejected this claim, noting that Plaintiff sought to rely on a minority position permitting gap time claims within the Tenth Circuit Court of Appeals (which does not encompass Illinois). The court did note that where an overtime event has occurred, an employee can receive compensation for both gap time and overtime hours. Id. at 14-15, citing 29 C.F.R. § 778.315. 

Lululemon demonstrates a stark reality: employees and their counsel continue to bring wage claims in the face of contrary authority. Absent emphatic direction from either the relevant Circuit court or the United States Supreme Court (which has issued very few decisions addressing the FLSA), employers must remain proactive in this area, and be prepared to defend claims as they arise. Furthermore, state law may provide a cause of action for unpaid gap time. The best advice is to always act with caution. 

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As previously discussed, a federal court in the Western District of New York issued several important rulings in an FLSA case brought by a retail specialist responsible for the stocking, pricing and display of Black & Decker products at six Home Depot stores. In an omnibus decision reviewing all of these district rulings, the Second Circuit has held:

·         The district court properly ruled that the time plaintiff spent commuting to any of the six stores was non-compensable commuting time, even if it was preceded by compensable administrative work in the form of reviewing schedules or work-related communications; and

·         The district court erred in granting summary judgment as to Plaintiff’s off-the-clock claim, finding fact issues existed regarding whether Kuebel, who admitted to falsely shaving time from his time sheets to reflect only forty hours of work, was following instructions given by supervisors.

Kuebel v. Black & Decker Inc., No. 10-2273, 2011 U.S. App. LEXIS 9448 (2d Cir. May 5, 2011). Detailed analysis of this decision is available on the Jackson Lewis web site here.

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The FLSA requires that employers pay employees for all work time, as well as for any time that the employee is “engaged to wait.”  An employee is “engaged to wait” when the employee is idle, but is constrained with respect to engaging in personal activities. Thus, the employee’s time is deemed to be “for the benefit” of the employer.  Examples may include time spent waiting to respond to on-site incidents, monitoring a work location, or maintaining a presence in a particular area for public safety reasons,. When the employee is deemed free to pursue personal interests, the employee is “waiting to engage”, and need not be compensated. The United States District Court for the Southern District of Iowa recently issued a decision analyzing and applying the  “engaged to wait” concept to lunch breaks in regard to security employees required to remain on-premises and on-call during their meal period.

Aiken v. Catholic Health Initiatives, No. 4:07-cv-018, 2010 U.S. Dist. LEXIS 79782 (S.D. Iowa 2010), concerned private security guards who worked on the premises of defendant’s hospitals.   The security guards were  allotted 30 minute unpaid meal breaks pursuant to defendant’s written policy and practice. However for the duration of this break they were required to: (1) remain on-premises; (2) carry their hospital radios;, and (3) respond to any incidents or assignments in the hospital, should they arise. If a security guard was unable to take a full thirty-minute meal break during his/her shift due to an incident, the employee was instructed to notify their supervisor so that they could be paid for the entire thirty-minute period. The security guards sought compensation for these unpaid meal periods under the FLSA

The court held that the security guards were not “engaged to wait” during this time, but rather were free to pursue personal interests, such as making personal calls, playing card games, and surfing the Internet, and therefore their meal breaks were not compensable. Although the court acknowledged that the employer derived some benefit from the security guards’ “deterrence value” when they remained on premises—especially considering that each hospital had only one security guard per shift—it nonetheless found that the “predominant benefit” of the meal break fell to the employees themselves. 

Interestingly, the security guards argued that they were free to pursue personal activities during extensive “down time” during their compensable work hours, and therefore the activities pursued during “working time” and during the meal breaks were indistinguishable and, thus, equally compensable. The court flatly rejected this argument, finding such time was plainly not work, even if the employer chose to compensate for such personal time during the actual workday. 

In rejecting Plaintiffs’ claims and holding that neither 1) the potential to have to perform work nor 2) the actual performance of work on an occasional basis converted all meals breaks to compensable time, the court did note that if the security guards’ meal breaks were interrupted with a high level of frequency then the meal breaks could potentially be considered working time. However, the interruptions here were too infrequent to rise to that level, and regardless employees were paid whenever they notified their supervisors of a meal break interruption,. 

Employers who wish to require employees to remain on-call during meal periods must be cautious of state laws and ensure that any such on-call time does not regularly restrict employees from engaging in personal activities.

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Reinforcing the importance of properly crafted and enforced work-time tracking policies, Judge  Michael Telesca of the Western District of New York recently dismissed the balance of a plaintiff’s claims in a lawsuit alleging failure to compensate non-exempt employees for all overtime hours. The Court based its decision on the employer’s strong time tracking policies and protocols. Kuebel v. Black & Decker (U.S.) Inc., 2010 U.S. Dist. LEXIS 46533 (W.D.N.Y. May 12, 2010).

The plaintiff in Kuebel was a retail specialist responsible for the stocking, pricing and display of Black & Decker products at six Home Depot stores. Id. at * 8-9. He alleged that his supervisors instructed him to “shave” his timesheets to reflect forty hours worked each week, regardless of how many he actually worked, in contravention of Black & Decker’s written policies regarding timekeeping. Id. at * 22-23. Based on the Court’s review of the claims and plaintiff’s records of hours worked, as  reflected by his timesheets, his calendar and his company-issued PDA, the Court granted summary judgment to Black & Decker. Id. at * 32-45. 

In analyzing the Defendant’s summary judgment motion, the Court considered whether Plaintiff had demonstrated the two “essential” components of his “off the clock” claim, namely “1) the amount of uncompensated work he actually performed and (2) that defendant had actual or constructive knowledge of the amount of time that plaintiff was working off-the-clock.” Id. at * 30. 

As to the first prong, evidence of the amount of uncompensated work, the Court held that plaintiff failed to demonstrate the inadequacy of Defendant’s time records (which would have entitled Plaintiff to a lesser burden of proof). Id. at * 30-32. The time records were thus an accurate record of Plaintiff’s overtime worked. And, the Court further reasoned that based on plaintiff’s own contradictory statements regarding the percentage of his timesheets which were allegedly inaccurate, plaintiff could not prevail even if entitled to the lower standard, which typically is available to Plaintiffs in FLSA cases only where the employer has failed to maintain accurate records of hours worked. Id. Thus, Plaintiff could not provide evidence of the amount of allegedly uncompensated work he had performed. Id.

Even if plaintiff was able to present evidence of uncompensated time, the Court stated no monies would be due since plaintiff could not meet the second prong of the test, in that he failed to demonstrate that the Defendant possessed “constructive knowledge” of his uncompensated work hours, despite his allegations that Defendant’s managers instructed him to underreport his time. Id. 

In an earlier opinion in the same case, the Judge had dismissed Plaintiff’s claims for alleged unpaid commuting time. Kuebel v. Black & Decker (U.S.) Inc., 2009 U.S. Dist. LEXIS 43846 (W.D.N.Y. May 18, 2009)(commute time up to 60 minutes to and from varying job sites not compensable under FLSA).   There, the Court held that despite the fact that Plaintiff’s initial “commute” could be to any one of his six assigned stores, Black & Decker’s policy of designating the first hour of that commute as non-compensable commuting time did not violate the FLSA. The Court did not reach the question of whether the entire commute was non-compensable, as Black & Decker treated commuting time in excess of the first hour as compensable.

Kuebel demonstrates that it is possible for an employer to obtain summary judgment on a claim for alleged unrecorded unpaid work time even where that employee is a “field” employee not under the employer’s roof and immediate supervision. It is essential for all employers to ensure that their timekeeping policies comport with applicable federal and state law, expressly prohibit “off the clock” work and clearly and unequivocally advise employees to report all hours worked. 

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