Employees Must Be Compensated for Computer Boot-Up Time

​Over 300 call center representatives (CCRs) of Nelnet Diversified Solutions LLC were entitled to pay for time devoted to booting up their work computers and launching software before they clock in, the 10th U.S. Circuit Court of Appeals ruled.

Nelnet is a student-loan company that operates several call centers in Lincoln, Neb.; Omaha, Neb.; and Aurora, Colo., where its employees service student loans and interact with customers over the phone and through e-mail. Nelnet CCRs were nonexempt and paid once they clock into the time-keeping system at their individual workstations.

Nonetheless, the CCRs perform several pre-shift tasks before they can clock in. CCRs must first start their work computer. The CCRs next insert their security badge into the computer and enter their credentials. The computer then automatically launches the specialized software program Citrix, which in turn loads the CCR's personal desktop and Nelnet's intranet. The intranet contains a link to the time-keeping system. Once the intranet has loaded, an employee has access to the time-keeping system and may, and nearly always does, clock into the system and begin earning pay for hours worked.

The median amount of time that the CCRs devote to these pre-shift activities, which varies between the three call-center locations, is approximately two minutes per shift.

A CCR filed a collective action—to which over 350 individuals opted in—seeking payment from Nelnet for the time he and other CCRs devoted to booting up their computers and launching software, arguing that such activities were compensable work for which Nelnet failed to pay them, in violation of the Fair Labor Standards Act.

The parties filed cross-motions for summary judgment on whether the pre-shift activities were compensable work and, if so, whether the time the CCRs devoted to these activities was so minimal that Nelnet need not compensate them for it.

The district court resolved the first issue in favor of the CCRs, finding that the pre-shift activities were compensable. But it concluded that the time at issue was too minimal to be compensable and therefore granted summary judgment to Nelnet. The CCRs appealed, arguing that the time at issue is both compensable and not "de minimis."

Nelnet then sought to recover certain of its costs as the prevailing party. The district court awarded Nelnet approximately $58,000, including over $33,000 in e-discovery costs. The CCRs appealed that ruling, arguing that the district court erred in awarding the e-discovery costs and entering the award jointly and severally.

On appeal, the 10th Circuit considered anew whether the small periods of time CCRs spent each morning waiting for their computers to boot up was de minimis. It considered three factors:

1. The practical administrative difficulty of recording the additional time.

2. The size of the claim in the aggregate.

3. Whether the employees performed the work on a regular basis.

The 10th Circuit relied upon the district court's acceptance of estimates provided by Nelnet's expert, who calculated that the median time from the badge swipe to clock-in was 1.6 minutes in Omaha, 2.2 minutes in Lincoln and 2.27 minutes in Aurora. The court thus found that the amount of time devoted to booting up and logging on was not so miniscule that it would be difficult to measure, because Nelnet's expert was able to do so in the litigation.

Regarding the size of the claim in the aggregate, the 10th Circuit cited the parties' agreement that the lost wages for all CCRs totaled about $30,000. Each CCR would be entitled to approximately $2.40 per week, which equals approximately $125 a year, and an aggregate claim of approximately $500 for the total period at issue. The appeals court found this amount sufficient to support a claim based on prior case law.

Regarding the regularity of the task, the 10th Circuit found that this factor weighs strongly in the CCRs' favor because every CCR performs the same pre-shift activities before every shift for approximately the same amount of time, depending upon the location.

For these reasons, the 10th Circuit reversed the district court award of summary judgment to Nelnet and its award of costs to Nelnet and sent the case back to the district court for further proceedings.

Peterson v. Nelnet Diversified Solutions LLC, 10th Cir., No. 19-1348 & 20-1217 (Oct. 8, 2021).

Professional Pointer: Employers must compensate nonexempt employees from the very start of their workday and include even minor delays in startup unless unusual and very short.

Jeffrey Rhodes is an attorney with McInroy, Rigby & Rhodes LLP in Arlington, Va.