Employer Might Have Unlawfully Failed to Pay Overtime

Takeaway: This decision underscores the responsibility of employers to ensure accurate and fair compensation for all work performed, regardless of how minimal it might seem. Employers must be diligent in their timekeeping practices and should implement systems that capture all compensable work time. Failure to accurately record time spent on necessary tasks such as booting up computers could result in significant liability.

A call center operation might have violated the Fair Labor Standards Act (FLSA) by failing to pay overtime wages for the small increments of time that its employees regularly spent booting up and shutting down their computers each day, the 9th U.S. Circuit Court of Appeals ruled. The appeals court reversed a district court’s grant of summary judgment to the employer and remanded the case for further proceedings.

A certified collective of call center workers alleged that their employer violated the FLSA by failing to pay overtime wages for the time that they spent booting up and shutting down their computers each day. Workers were required to use a computer timekeeping software program to clock in and out for each shift. The employer instructed workers to clock in before opening any other computer program necessary to perform their call center roles; its policies prohibited off-the-clock work.

Workers were required to be clocked in and ready to accept calls at the scheduled start time of each shift. However, company policy prohibited workers from clocking in seven or more minutes before the scheduled start time of a shift. Compensable work time was computed by rounding to the nearest quarter hour.

Workers did not have permanently assigned workstations and were required to go to computer workstations each shift on a first come, first served basis. Some computers were slower than others, and workers sometimes had to try different workstations before finding a workable computer. Because it took additional time to engage a computer before it was possible to clock in, workers had to arrive at the call center some amount of time before the scheduled start time of each shift. 

At the end of each shift, workers generally finished the ongoing call, closed out of nontimekeeping programs, and then clocked out. After clocking out, the workers had to log off the computer or turn it off. The parties dispute how long it generally took workers to boot up and shut down the computers at the beginning and end of each shift. 

In a previous appeal, the 9th Circuit had reversed the district court’s grant of summary judgment to the employer and remanded the case for the court to determine whether time spent shutting down computers is compensable, whether time spent booting up and shutting down computers was de minimis, and whether the employer had knowledge of the overtime work. On remand, the district court again granted summary judgment to the employer, holding that the time was de minimis and therefore not compensable under precedents establishing that the FLSA does not require an employer to pay wages for work performed before or after scheduled work hours where the amount of time in question is de minimis.

With the decision on appeal for the second time, the appellate court examined whether the de minimis doctrine remains good law after the U.S. Supreme Court’s decision in Sandifer v. U.S. Steel Corp. in 2014, holding that the de minimis doctrine was not applicable to 29 U.S.C. Section 203(o), a provision of the FLSA concerning time spent changing clothes or washing. The court found that Sandifer did not disturb its applicable case law on the de minimis doctrine in the context of an FLSA claim under Section 207, so the doctrine remains applicable. “Sandifer’s rejection of the de minimis rule in a limited statutory context is fully compatible with the continued application of the doctrine outside of that context, including in the circumstances here,” the court held.

Turning to the question of whether the district court correctly determined that the time was de minimis, the court said that, under its precedent, “whether work time is de minimis turns on the regularity of the additional work, the aggregate amount of compensable time, and the practical administrative difficulty of recording the additional time.” 

Applying these factors, the court found that workers performed uncompensated work before each and every shift and that the employer knew its workers spent time prior to each shift engaging the computer before clocking in since the timekeeping system was on the computer. Although the parties dispute whether employees were required to ensure the computers were shut down at the end of every shift, the court said a reasonable fact finder could conclude that this was the case, creating a triable issue of fact as to whether the workers performed off-the-clock work at the end of every shift as well.

The court also found a triable question of fact as to the aggregate amount of time at issue. After aggregating boot-up and shutdown times, the record reflects that employees spent anywhere from a few seconds up to 30 minutes per shift on these tasks. “To the extent workers may have spent up to 11, 15, 20, or even 30 minutes per shift on these tasks, the time cannot be characterized as de minimis,” the court said. A reasonable fact finder could conclude that when all the time is aggregated per employee, the total uncompensated time could be “substantial” over time, the court found.

Further, the court said it saw no reason why the employer, to improve the accuracy of the estimates, could not require employees to swipe in immediately before beginning to boot up their computers to clock in or to swipe out immediately after they booted down. Even installing a physical punch clock near the computer workstations would have allowed the time spent by employees on these tasks to be captured, the court noted.

“[W]hen the summary judgment record is viewed in the light most favorable to the plaintiff, the regularity of the work and the lack of practical difficulty in recording the time favor a conclusion that the time at issue is not de minimis,” the court said. Since it is ultimately the employer’s burden to establish that the claimed time was de minimis and it had failed to do so, the court found that summary judgment was improper.

The employer’s requirement that workers be ready to take calls at the scheduled shift start time—as well as its “advice” that workers arrive at least 10 minutes ahead of their clock-in time so as to “boot up and log in appropriately and be clocked in and ready to take their first call by their start time”—indicated that the employer was aware its workers were arriving more than seven minutes before their scheduled start times and working during the pre-shift period to engage their computers before clocking in.

Finally, although the employer had a manual system for adjusting an employee’s recorded time if an employee came to the employer asking for an exception due to delays experienced while clocking in after the scheduled shift start, an employee could be reprimanded for using this process too frequently. Given the dispute over whether the employer had a policy against such adjustments, the district court erred in requiring the plaintiffs to provide evidence concerning the denial of specific requests for adjustment, the court held.

The appeals court reversed the grant of summary judgment and remanded the case for further consideration consistent with its opinion.

Cadena v. Customer Connexx LLC, 9th Cir., No. 23-15820 (July 10, 2024).

Rosemarie Lally, J.D., is a freelance legal writer based in Washington, D.C.