More on Minutes Adding Up Under Recent Supreme Court Fair Labor Standards Act Case
In an earlier post, “Those Minutes Add Up: Recent Supreme Court Case Highlights Fair Labor Standards Act Compliance,” I said that although many employers do not confront the specific safety gear issue involved in that Fair Labor Standards Act case, “unaffected employers still can learn something from this decision.”
An article in SHRM Online (members only) contains a more detailed discussion of such possible broader implications, giving specific examples:
What if an FLSA-covered employee calls from home to chat with a supervisor about work for 45 minutes before coming in? The employee’s commute, typically not compensable, arguably may be analogous to the walk from the locker room to the production job floor . . .Or suppose a non-exempt worker comes into the office, flips on the computer and then goes down to the cafeteria to shoot the breeze with co-workers for 45 minutes. Did the workday start when the employee turned the computer on?
There is not much case law shedding light on whether switching on a computer is too minimal an activity to be captured by employer’s compensation schemes, although . . . there is a good argument that it is too brief to capture.
Nevertheless, employers should tread cautiously. The court’s refusal, once the compensable workday has started, to carve out a discrete block of time as noncompensable, provides a powerful incentive for employers to examine their wage and hour practices—in particular their recordkeeping for compensation systems . . .
Employers that fail to align their compensation practices with the Supreme Court ruling may expose their organizations to FLSA liability, which can be extensive given the prevalence of class actions, she cautioned.
“Fallout from FLSA ‘donning and doffing’ case may extend far” by Allen Smith (quoting Atlanta attorney Lisa A. Schreter)
These situations may be more likely to arise with salaried employees exempt from overtime, thus avoiding these concerns. However, that observation merely highlights the need to carefully examine which positions are — or should be — properly classified as exempt from overtime compensation, taking into account the new regulations.
The above examples illustrate just a few of the many ways in which FLSA overtime rules are impractical in today’s business environment. It would be a shame if overtime litigation discouraged or constrained the development of various work-home flexibility and telecommuting options.
One possible outcome of extensive and expensive litigation over such wage and hour issues in the context of telecommuting and computer-based workers might be increased reliance on home-working independent contractors, who are not covered by the FLSA. But this would also draw litigation — over whether they are independent contractors or employees.
Payment on a basis other than hourly, such as by the unit produced, service call handled, commission, etc., while not in itself avoiding the need to pay overtime, would strengthen the case for independent contractor status.
If a company felt home-based workers were nonetheless likely to be classified as employees, so that overtime compensation might have to be paid, such a non-hourly basis for payment might reduce concerns about payment for unproductive time.
In another SHRM article, “Developing a ‘Clock-Work’ State of Mind: Avoid ‘Off-the-Clock’ Work Claims by Non-Exempt Employees” (members only), attorney Schreter agrees with my point about minutes adding up:
At their peril, some employers dismiss risks associated with off-the-clock work claims on the mistaken assumption that the time involved is so negligible employees will not pursue recovery. While certainly true that many off-the-clock work cases involve small individual amounts per day, these minutes can quickly escalate into millions of dollars in liability when hundreds of individual claims are amassed into a single case.
