What’s Work Got To Do with It?

(First in a two-part series)

The concepts underlying the Fair Labor Standards Act (FLSA) are relatively simple. If an employee is not exempt from overtime, you must pay the person the minimum wage for all working hours up to 40, plus time and a half of the employee’s regular rate for all hours worked in excess of 40 in a given workweek. That’s it. No big deal, right? If only it really were so straightforward.

While relatively simple in theory, the FLSA is deceptively complex in reality. Seven- and eight-figure judgments and settlements for good-faith mistakes have become painfully common.

This article, the first in a two-part series on common FLSA errors, examines three common areas of employer exposure relating to what is "working time" for nonexempt employees who are on-site:

• When getting ready for work is working time.
• When breaking from work is working time.
• When waiting to work is working time.
• What does compensable work have to do with these activities? Often, under the FLSA, the answer is “plenty.”

Getting Started

The law is clear that an employer must pay employees not only for their principal activities but also for preliminary activities at the beginning of the day and postliminary activities at the end of the day, as long as the preliminary and postliminary activities are integral to the employees’ principal activities. If a preliminary or postliminary activity is found to be integral, then generally every activity after or before it is compensable under the “continuous workday” rule.

This issue recently reached the U.S. Supreme Court in, of all places, a slaughterhouse. In IBP v. Alvarez (546 U.S. 21 (2005)), the Supreme Court agreed that the donning (putting on) and doffing (taking off ) of unique personal protective equipment constituted preliminary and postliminary activities that were integral to the employees’ principal activities.

As a result, the Supreme Court held that the compensable workday under the FLSA included the time that covered employees spent walking from changing areas where they donned their personal protective gear to the production area, and the time they spent walking back to the changing areas at the end of a shift before they doffed their personal protective gear.

If your employees don’t don or doff anything, you may be tempted to ignore the Alvarez decision. Don’t give in to that temptation, however, because the Alvarez decision has very broad potential application beyond the facts of the case. For example, assume food servers are required to wash their hands at the beginning of the day and after any break.

The hand-washing clearly would be integral to the principal activity of food service. Accordingly, the employees would have to be paid for their hand-washing time. Further, they also would have to be paid for the walking time to and from the washing area to the working area.

In fact, in some instances, the compensable preliminary activities may be performed at home, and thus travel to work from home, ordinarily noncompensable, may become compensable.

Narrow Exception

The Department of Labor (DOL) recognizes that there may be a “de minimis” exception with regard to the duty to pay for preliminary and postliminary activities, even if they are integral to an employee’s principal responsibilities. The DOL recognized this very narrow exception most recently in a post-Alvarez opinion letter with regard to donning and doffing “nonunique gear,” such as hairnets (DOL Wage and Hour Advisory Memorandum No. 2006-2).

However, relying on the de minimis exception, with regard to nonunique gear or anything else, is dicey for at least three reasons:

• In determining what is de minimis, the DOL looks not at each task in isolation but rather at the amount of time spent on tasks in the aggregate. For example, even if the time it takes to don a hairnet is de minimis on any given day, it may not be de minimis when this time is aggregated for the week or month. Plus, the regulations provide that an employer may be excused from Paying for de minimis time only if it would be administratively difficult to record the time, which is often not the case.
• Even if the amount of time is de minimis in the aggregate under federal law, a de minimis exception may not apply under state law.
• Regardless of whether there is a de minimis exception under federal and the applicable state law, the cost of proving that the time was de minimis in a class or collective action usually far Outweighs the potential cost savings.

The bottom line: Rely on the de minimis exception if necessary in litigation, but don’t build it into your wage and hour compliance plans. What if the task should require only modest time but the Employee’s actual time is anything but modest? Can the employer put a cap on the time it will pay? Can the employer dock for excessive time?

The answer to both questions is an unequivocal “no.” If the employee spends too much time on preliminary or postliminary tasks, the employer can and should manage the employee’s performance by way of counseling, discipline or discharge. What the employer cannot do is manage the performance by way of the employee’s pay.

Employers need to create a culture in which employees are paid for all time they work, which includes not only their principal tasks but also preliminary and postliminary tasks that are integral to their principal tasks. In fact, employers may need to pay employees for some times when they are not even working--for example, during certain breaks.

Compensable Breaks

The FLSA regulations provide that an employer ordinarily must pay for a rest break if it is under 21 minutes. The negative implication is that if the rest break is 21 minutes or more, it ordinarily need not be paid. The FLSA regulations also provide that an employer ordinarily must pay for a meal break if it is less than 30 minutes. The negative implication is that if the meal break is 30 minutes or more, it ordinarily need not be paid.

Under the DOL’s regulations, then, breaks that are between 21 and 29 minutes fall into a gray area, with their compensability dependent on whether they are characterized as rest breaks (paid) or meal breaks (unpaid).

A number of DOL investigators in different jurisdictions nevertheless have taken the position, as a matter of enforcement, that employers must pay for all breaks that are shorter than 30 minutes. This prevents employers from evading the purpose of the regulations by characterizing a short meal break as a rest break to avoid paying for it.

However, an across-the-board 30- minute enforcement position is inconsistent with the DOL regulation’s plain language on rest breaks. It is also inconsistent with case law regarding meal breaks.

From a practical standpoint, litigating break issues is dangerous and expensive. They almost always are resolved in class or collective actions. Ordinarily, prudence dictates playing it safe by paying for all breaks that are shorter than 30 minutes and requiring that all unpaid breaks be a minimum of 30 minutes.

Other Potential Liabilities

Even if an employer requires that all unpaid breaks be a minimum of 30 minutes, that is not the end of the analysis. As you drill down, other potential liabilities may be found. Here are but three additional examples:

First, some employers do not require that employees sign or clock in and out for their meal breaks, and they build in an assumption that an employee will take a 30-minute unpaid lunch. This is not unlawful per se, but it carries legal risk.

More specifically, it opens the door for employees to argue that they never took their breaks. At a minimum, it makes it more difficult for the employer to prove that the employee took the full 30 minutes if the employee claims that he or she did not.

The safest approach is to require employees to sign or clock in and out before and after their breaks. Employers also should have procedures for employees to follow if they forget to clock out and in with regard to their breaks.

Second, as noted above, there are certain preliminary and postliminary tasks that employees must perform before and after they start and stop work and for which they must be paid. To the extent that these tasks must be performed before and/or after lunch as well, employees must be paid for this time too, and the policies must be clear on this point.

For example, let’s return to the food servers. Assume they are required to wash their hands not only at the beginning of each day but also before returning to work after their lunch break. They should be instructed to wash their hands only after they have signed or clocked back in following lunch and should be paid for their walking time from the washing area to the work area. Silence on this issue may lead to the impression that the hand-washing should be off the clock with the risks that go with that impression.

Third, if an employee is required to do any work during his or her break, he or she ordinarily must be paid appropriately for the break (discussed below). This may be subject to a de minimis Exception, but remember that what is de minimis is cumulative and the exception may not be available under some state laws. If an employee does any work during the break, in most instances the employer will need to pay the employee not just for the few minutes in which the employee worked but rather for the entire break. More specifically, unless an employee has 30 consecutive, uninterrupted minutes to enjoy a break in which he or she is relieved of any responsibilities for his or her employer, the employee ordinarily must be paid for the entire break. This means that supervisors must be cautioned about asking employees to do any work during their breaks.

Further, supervisors and employees should be instructed that if an employee is asked to do any work during a break, the employee should fill out a form to ensure thathe or she is paid for the entire break.

FLSA Purgatory

Between working time and break time, there is FLSA purgatory, and it is called waiting time. So when does an employer have to pay for such waiting time?

Assume an employee likes to come to work early and reads a book or has a cup of coffee with peers before he or she begins working. Does the employer have to pay the employee for this waiting time? The answer is an annoying lawyerism: “It depends.”

One factor upon which it may depend is whether the employee signs or clocks in when he or she arrives but then does not begin working until his or her scheduled start time. Signing or clocking in early under these circumstances does not automatically mean that the time is working time.

However, in the event of a DOL investigation or federal court litigation, the presumption is that the start time on the time records is the time when the employee started working, and such time records will reflect hours for which the employee was not paid.

Accordingly, it is generally recommended that employees be instructed that if they wish to arrive at work early, they cannot sign or clock in before their scheduled start time and in all instances they cannot do any work before they sign or clock in. This helps to demonstrate that their early presence was solely for their benefit and not for their employer’s.

However, even if the employee does not sign or clock in until his or her scheduled start time, you run the risk that an employee who is allowed to arrive for work before his or her scheduled starting time may do some “preliminary tasks” to get ready for the day. Getting oneself a cup of coffee would not be considered such a compensable preliminary task, but straightening up one’s desk or updating a to-do list very well may.

Some employers prohibit employees from arriving for work early and/or from being in their work areas before a time shortly before their scheduled start time. This minimizes the FLSA risk but may create employee relations risks. There may be reasons unrelated to the workplace why employees wish to arrive to work early--for example, because of convenience after dropping off a child at school. Accordingly, as always, employers need to balance legal and business risks.

Monitor Early Work

If an employer takes the legal risk of allowing early arrival, the employer should instruct its supervisors to monitor early working. If a supervisor sees an employee doing any work before his or her start time, the supervisor should make sure that the employee is paid for that time and counsel the employee about what is expected of him or her in the future.

The same notion applies to working unapproved overtime at the end of the day. If the supervisor knows that an employee has worked unapproved overtime off the clock, the supervisor should make sure that the employee is paid for the overtime and then counseled about not working overtime in the future without prior supervisory authorization.

‘Engaged To Wait’

Finally, it is important to note that if an employer requires that an employee be in a designated area at a specific time to be ready to work, then that waiting time may be compensable, even if the employee doesn’t do anything but socialize during that waiting time. The question is whether the employee is “waiting to be engaged” or “engaged to wait.”

For example, an employer may tell its employees that although the shift does not begin until 8 a.m., the employer expects them to be in the meeting room by 7:30 a.m. in case they can or need to start early. In these circumstances, the employees are being engaged to wait, and their day starts at 7:30 a.m., not 8 a.m.

Off-Site Considerations

This article focuses primarily on when to compensate employees when they are physically at work. However, in a 24/7 working world, employees often work when they are physically away from their place of employment.

This can raise distinct questions. For example, do employers have to pay for overnight travel time? On-call time? Telecommuting time? Using their personal digital assistants?

Stay tuned for the Legal Trends column in December, which will analyze when nonexempt employees must be paid for activities outside the workplace.

Jonathan A. Segal, Esq., is vice chair of WolfBlock’s Employment Services Group and the managing principal of the WolfInstitute. His practice in Philadelphia concentrates on preventive planning, counseling and training to maximize an employer’s legal compliance and to minimize an employer’s exposure to litigation and other adversarial challenges.