A Tennessee car wash found out the hard way that “waiting time”—time employees spend between tasks—is paid working time. Employees of the Shur-Brite car wash in Nashville sued claiming that the car wash would clock the workers in and out multiple times a day—clocking them in when a car pulled in to be washed, clocking them out when there were no cars around.
An advocate for low-wage earners went undercover at Shur-Brite and was clocked out more than 10 times during a single eight-hour shift. The result—he was paid for only four of the eight hours. The case settled for $130,000.00.
It’s tempting to have employees work through lunch—there’s always more to be done, business doesn’t necessarily come to a stop at lunchtime, and anyway, management often works through lunch without additional compensation. So, why not other staff?Continue Reading...
It is generally common knowledge that employees who do not fall into one of the statutory exemptions to the overtime pay regulations (i.e. “non-exempt” employees) need to be paid for all of the time they work. What about those after-hour minutes checking e-mails and text messages on BlackBerrys® and other PDA devices? Actually, it is possible that employees should be paid for this work-related activity, even if it is occurring outside what would be considered to be normal working hours.
T-Mobile recently found this out the hard way when it was the recipient of a class-action lawsuit asserting claims for overtime wages. Among other assertions, the employees claim that they were required to review and respond to numerous “e-mails and text messages at all hours of the day and night.”
T-Mobile is not the first. AT&T Mobility was subject to a similar suit at the end of 2008 which is still on-going, and a Milwaukee office of property management firm CB Richard Ellis was sued by a maintenance worker earlier this year alleging that he was forced to work after hours without compensation for time spent on his BlackBerry®.
This topic is not new. In fact, a Yahoo! TECH blog post warned about such potential lawsuits over a year ago.
In an environment where so many non-exempt employees now use a myriad of hand-held devices to send and receive work-related e-mails, and where companies are expecting fewer employees to do the work of the former many, companies need to be mindful of the overtime pay requirements so that they do not become targets of such lawsuits as well. In short, if non-exempt employees are performing work, they need to be compensated for it. Companies are advised to review the time-keeping policies and after-hours communications policies they impose on non-exempt employees. In the long run, it will likely be less expensive to devise a time-keeping system and pay the employees for after-hours work, rather than defend against a class-action lawsuit.
Appropriate remedies for inefficient work are performance management and redistribution of workloads, not modification of time records regarding overtime. Employers should be realistic in terms of setting expectations for use of overtime and the workload assigned. Even if workers take longer than the time designated for a task, employers still must pay overtime. In short, to control overtime employers should manage their workers and discipline them if necessary, not modify time records.
However, these rules can be hard for employers frustrated with employee performance to follow. Even the federal government – this time, the U.S. Postal Service – has been accused of violating the federal overtime rules. In a lawsuit filed on June 10, 2009 in the Eastern District of Texas, mail carriers in Texarkana and surrounding areas allege that the USPS violated the Fair Labor Standards Act by requiring them to deliver all assigned mail within eight (8) hours, even though their supervisors were informed or should have known that it would take longer. The lawsuit also alleges that the supervisors would routinely modify time records to ensure that no overtime was recorded. The lawsuit seeks $10,000 or more for each plaintiff and estimates that approximately 20,000 mail carriers might be part of the class – i.e., there is a possible total of $200 million in compensatory damages alone. So, while it may be true that “neither rain, nor sleet, nor gloom of night stays these couriers from the swift completion of their appointed rounds,” when doing so takes more than 40 hours a week, mail carriers are entitled to overtime pay.
In an all too familiar scenario, another large wireless operator has been forced to pay back wages for overtime work. This time, Sprint (which has paid out millions in collective action wage suits in recent years) paid a $120,000 fine after a federal labor investigation revealed that non-exempt employees at a call center in a Bristol, Virginia were not paid for “off-the-clock” work.
Courts have held in similar situations at telecommunications companies (including Sprint) that “off-the-clock” work call center employees must do before they can take their first call of the day – booting up their computers, logging onto the company's network, opening computer programs and reviewing company e-mails – constitutes preliminary work that is necessary to the principal activity performed by these individuals. Since this preliminary work is done for the benefit of the employer, it is compensable under the Portal-to-Portal Act. While the Sprint fine was based on an average of only 9 minutes per employee per day of unpaid time, a class action lawsuit just filed by former employees of a call center operated by APAC Customer Services, Inc. in La Crosse, Wisconsin alleges that employees (who engaged in the same type of activities before clocking in as the Sprint workers) were underpaid for 45 minutes per day for three years – and APAC has around 9,000 workers who could join this suit.
Lawsuits in such situations have been more frequent and successful in recent years. This may be the result of the 2005 U.S. Supreme Court decision, Alvarez v. IBP [546 U.S. 21 (no. 03-1238)],which affirmed that when non-exempt employees perform “integral and indispensable” activities for their employer's benefit, their workday begins, and it continues until they complete their last task of the day.
The takeaway is simple. Companies must be aware of what non-exempt employees are doing before they officially “begin” the workday. Companies should develop a policy that ensures that non-exempt employees are not permitted to begin work prior to their regular starting time (or continue working after their ending time). However, employees who break the rules, even if they are disciplined, may be entitled to be paid for unauthorized overtime work in certain situations. Thus, workplace policies alone are not enough – companies must monitor and enforce these policies to avoid liability.
In a recent decision, a Federal Mediation and Conciliation Service arbitrator found that the Equal Employment Opportunity Commission had consistently failed to pay many employees proper overtime wages for hours worked in excess of 40 hours per workweek. Instead, the EEOC engaged in the often misused practice of providing compensatory time off (“comp time”) to these employees. While an exception to the FLSA permits most government agencies to offer certain non-exempt employees a choice between overtime pay and comp time, the EEOC apparently erred by failing to give employees a real choice. When it comes to interpreting the overtime rules, even the government agencies can’t seem to get it right.
In the limited situations in which employers can offer comp time to an employee in lieu of overtime pay, the employer generally must give the employee 1.5 hours of comp time for every hour of overtime worked. This practice is not legal for the vast majority of private employers, and local and state governments can offer only their non-exempt employees comp time instead of overtime pay in certain situations. Thus, both government entities and private employers who grant employees comp time often still end up having to pay employees overtime pay for the hours they work in excess of 40 in a workweek.
The confusion on this issue has resulted in numerous overtime claims [e.g., Beck v. City of Cleveland, 390 F.3d 912 (6th Cir. 2005), Heaton v. Moore, 43 F. 3d 1176 (8th Cir. 1994), Maldonado v. Administracion de Correccion, 1992 WL 301403 (D. Puerto Rico)]. Giving comp has been a common (but illegal) practice in many industries and has resulted in employees being denied substantial amounts of overtime pay. In light of current economic conditions, even more companies may be tempted to try to avoid overtime costs and giving time off may seem like an attractive alternative. Using comp time, however, is clearly not the solution.
In the current economy, it is essential for employers to avoid paying out unnecessary overtime compensation. While getting a handle on overtime is certainly a worthy goal, it can only be achieved through skilled management – not by unilaterally denying overtime pay for overtime that was legitimately worked. In Chao v. Gotham Registry, 514 F.3d 280 (January 2008) the U.S. Court of Appeals for the Second Circuit resoundingly reaffirmed the U.S. Department of Labor’s long-held position that any work that is “suffered or permitted” by an employer must be compensated. It also created a standard for evaluating time worked by off-site employees, whose decisions about when to start and stop work cannot always be monitored by employers.
Gotham Registry is a placement agency that provides nurses to fill temporary vacancies at hospitals. As a consequence of a consent judgment issued in a 1994 DOL enforcement action against the company, Gotham’s nurses are considered employees. Since the nurses work away from Gotham’s site, Gotham does not have the ability to directly supervise their activities. The hospitals that are Gotham’s clients sometimes ask Gotham’s nurses to stay beyond their agreed-to shifts. Despite a policy requiring nurses to call in before accepting work that will put them over the 40-hour mark for a single work week, the nurses are not always able to get timely approval from Gotham due to the 24-hour nature of hospital work. Gotham cannot always recover its costs from hospitals for overtime when rates are not negotiated in advance. Gotham was generally paying nurses who worked overtime without getting approval straight time for hours worked in excess of 40. Despite the fact that Gotham may neither control nor always benefit from this overtime work, the Chao court reasoned that Gotham had “imputed knowledge” of the work (albeit after the fact when it got the nurses’ time sheets), and that “work is work” and must be compensated.
The Chao decision puts Gotham between a rock and a hard place, since a nurse in Gotham’s employ could literally have to choose between saving a life and notifying Gotham of a hospital’s request that s/he stay on the job on an overtime basis, generating costs that may not be recompensed by Gotham’s client. In most other industries, however, there is no reason why an employee cannot be expected to seek authorization before working overtime. An employee who fails to do so has to be compensated for the work, but can be disciplined in other ways.