article - JD Supra
National Law Journal
ARTICLE September 10, 2012
Michael Starr 212.513.3506 [email protected]
Out-of-office smartphone use: risks for employers Employers could face claims under the Fair Labor Standards Act for failure to pay overtime or keep accurate records. Michael Starr Katherine Healy Marques The proliferation of smartphones and personal digital assistants has afforded many American workers the ability — for good or ill — to stay connected to their work when they are not actually in the workplace. This allows greater productivity for their companies because business-related communications can be made wherever the worker happens to be and at virtually any time of day — even, one might say, on their own time. Until quite recently, companies provided smartphones and BlackBerrys only to managers and professionals, and they generally fall under the so-called "white collar" exemption to federal wage-and-hour laws. But, as the use of company-supplied and personally owned personal digital assistants (PDAs) and smartphones has trickled down from the executive suites into the hands of hourly workers, who are not exempt from the overtime-pay requirements of federal law, their employers are at risk for claims under the Fair Labor Standards Act (FLSA) for unpaid wages, failure to pay overtime or failure to keep accurate records of hours worked. Employees have already begun initiating litigation against some very highprofile companies. For instance, a putative class action complaint was filed against T-Mobile USA Inc. alleging that the company expected "off-theclock" work to be done on company-issued BlackBerrys or other devices, but then failed to pay overtime for this work. See Agui v. T-Mobile USA Inc., No. 09-cv-02955 (E.D.N.Y. filed July 10, 2009). While this case settled before a court ruling on the issue of remotely performed overtime, multiple cases are still pending in federal court as the specific treatment of BlackBerry or iPhone use by rank-and-file employees is considered by the courts. Early indications in cases that are not settled do not bode well for employers. For instance, a Chicago police sergeant has brought a putative class action against the city of Chicago alleging that he received telephone calls, emails, voice mails and text messages on his PDA that he was expected to respond to while he was off the clock, yet he was not paid at the overtime rate for this additional working time. Allen v. Chicago, 2011 WL 94183, at *1 (N.D. Ill. March 15, 2011). A central precept under the FLSA is that
Katherine H. Marques 212.513.3567 [email protected]
employees must be paid for all time that their employer "suffer[s] or permit[s]" them to work. 29 U.S.C. 203(g). This is commonly referred to as "compensable" time — that is, time for which the employee must be paid and, if it occurs after the threshold of 40 hours in a week (or eight hours in a day in certain states), it must be paid at the overtime rate. In Allen, the court rejected the city's motion to dismiss because the after-hours activity alleged was compensable time and more than a minimal amount.
EXCEPTIONS EXIST There are some exceptions to the rule that all time worked must be paid. Under the Portal-to-Portal Act, workers need not be paid for traveling to the place where they perform the "principal activity or activities" of their job or for tasks that are "preliminary to or postliminary to" their principal activities, if they occur before or after their regular workday. 29 U.S.C. 254(a); IBP Inc. v. Alvarez, 546 U.S. 21, 27 (2005). In addition, if the amount of compensable time in dispute is small, courts will apply a de minimis rule because "[w]hen the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded." Reich v. NYC Transit Authority, 45 F.3d 646, 652 (2d Cir. 1995). Sometimes the de minimis exception will protect employers from liability for work done by an employee with a BlackBerry outside his regular working hours. In Chambers v. Sears, Roebuck and Co., 428 Fed. Appx. 400 (5th Cir. June 15, 2011), a group of service technicians who performed in-home appliance repair alleged that they were entitled to unpaid wages and overtime pay. The plaintiff-employees worked under the Home Dispatch Program that allowed the employees to drive directly from their home to their first scheduled appointment to start their day and go right home after their last appointment. The employees were instructed to log into the Sears system to upload onto a company-supplied laptop data from their completed calls and download future assignments. Their complaint alleged that Sears unlawfully deprived them of pay for this at-home work time. (Actually, if the technicians had prevailed, Sears would have had to pay them not only for their "laptop time" but also for the time traveling to their first assignment and traveling home after their last.) In Chambers, a recent amendment to the Portal-to-Portal Act, which governed commuting to work in companysupplied vehicles, took center stage. In affirming summary judgment for Sears, the U.S. Court of Appeals for the Fifth Circuit ruled that the time spent uploading and downloading data was noncompensable because it was "incidental" to the technicians' principal activities. The court also ruled that because plugging in their laptops and logging into the Sears system would take no more than a "minute or so" each day, it was "non-compensable, as de minimis." Id. at 418.
SUGGESTED PRECAUTIONS Employers seeking to avoid pay liability for work done remotely after (or before) the normal workday on smartphones or other devices should take certain precautions. The first defense is to understand which employees are hourly or otherwise nonexempt because those employees must be paid for all time worked, whether before or after their regular workday, if the tasks performed are one of the "principal…activities" of their job, which is a term construed broadly by the courts. If business effectiveness justifies supplying company cellphones or PDAs to hourly or other nonexempt staff (or communicating with those employees on their own devices), the company should provide clear instructions as to how and when it expects employees to use those devices for work purposes. If after-hours business use is infrequent and amounts to no more than a few — and we mean, a very few — minutes a day, then the recordkeeping and compensation requirements would not apply whether the employee was using her own or a company-supplied device (although it may well be asked why the company would supply a device if it were only used for minimal business purposes). Under the Chambers analysis, allowing workers to call or log in briefly to confirm work schedules or appointments is likely to qualify as de minimis work that is difficult to track and, therefore, effectively noncompensable under the FLSA. If, however, there is more than minimal electronic communication with hourly or other nonexempt employees outside their regular workday, the company must maintain records of all the time worked. This is both a statutory obligation and the means to establish a defense to claims of unpaid wages or overtime. Employers should, therefore, maintain uniform policies for employees to record their work time, even remote and off-hours work that fails to comport with the outdated concept of punching in and punching out of a time clock at the start and end of each regular day of work. This policy must be effectively communicated to all employees who received a company 2
smartphone or PDA or who may use their own devices to perform off-premises, off-hours work, and it must be consistently enforced. In that way employers can rein in unapproved off-hours work and avoid the obligation to pay for that work, sometimes at the overtime rate. Michael Starr is a labor and employment law partner in the New York office of Holland & Knight. Katherine Healy Marques is a labor and employment associate in that office.
www.hklaw.com Holland & Knight LLP This article first appeared in the September 10, 2012 issue of The National Law Journal. Further duplication without permission is prohibited.
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ARTICLE September 10, 2012
Michael Starr 212.513.3506 [email protected]
Out-of-office smartphone use: risks for employers Employers could face claims under the Fair Labor Standards Act for failure to pay overtime or keep accurate records. Michael Starr Katherine Healy Marques The proliferation of smartphones and personal digital assistants has afforded many American workers the ability — for good or ill — to stay connected to their work when they are not actually in the workplace. This allows greater productivity for their companies because business-related communications can be made wherever the worker happens to be and at virtually any time of day — even, one might say, on their own time. Until quite recently, companies provided smartphones and BlackBerrys only to managers and professionals, and they generally fall under the so-called "white collar" exemption to federal wage-and-hour laws. But, as the use of company-supplied and personally owned personal digital assistants (PDAs) and smartphones has trickled down from the executive suites into the hands of hourly workers, who are not exempt from the overtime-pay requirements of federal law, their employers are at risk for claims under the Fair Labor Standards Act (FLSA) for unpaid wages, failure to pay overtime or failure to keep accurate records of hours worked. Employees have already begun initiating litigation against some very highprofile companies. For instance, a putative class action complaint was filed against T-Mobile USA Inc. alleging that the company expected "off-theclock" work to be done on company-issued BlackBerrys or other devices, but then failed to pay overtime for this work. See Agui v. T-Mobile USA Inc., No. 09-cv-02955 (E.D.N.Y. filed July 10, 2009). While this case settled before a court ruling on the issue of remotely performed overtime, multiple cases are still pending in federal court as the specific treatment of BlackBerry or iPhone use by rank-and-file employees is considered by the courts. Early indications in cases that are not settled do not bode well for employers. For instance, a Chicago police sergeant has brought a putative class action against the city of Chicago alleging that he received telephone calls, emails, voice mails and text messages on his PDA that he was expected to respond to while he was off the clock, yet he was not paid at the overtime rate for this additional working time. Allen v. Chicago, 2011 WL 94183, at *1 (N.D. Ill. March 15, 2011). A central precept under the FLSA is that
Katherine H. Marques 212.513.3567 [email protected]
employees must be paid for all time that their employer "suffer[s] or permit[s]" them to work. 29 U.S.C. 203(g). This is commonly referred to as "compensable" time — that is, time for which the employee must be paid and, if it occurs after the threshold of 40 hours in a week (or eight hours in a day in certain states), it must be paid at the overtime rate. In Allen, the court rejected the city's motion to dismiss because the after-hours activity alleged was compensable time and more than a minimal amount.
EXCEPTIONS EXIST There are some exceptions to the rule that all time worked must be paid. Under the Portal-to-Portal Act, workers need not be paid for traveling to the place where they perform the "principal activity or activities" of their job or for tasks that are "preliminary to or postliminary to" their principal activities, if they occur before or after their regular workday. 29 U.S.C. 254(a); IBP Inc. v. Alvarez, 546 U.S. 21, 27 (2005). In addition, if the amount of compensable time in dispute is small, courts will apply a de minimis rule because "[w]hen the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded." Reich v. NYC Transit Authority, 45 F.3d 646, 652 (2d Cir. 1995). Sometimes the de minimis exception will protect employers from liability for work done by an employee with a BlackBerry outside his regular working hours. In Chambers v. Sears, Roebuck and Co., 428 Fed. Appx. 400 (5th Cir. June 15, 2011), a group of service technicians who performed in-home appliance repair alleged that they were entitled to unpaid wages and overtime pay. The plaintiff-employees worked under the Home Dispatch Program that allowed the employees to drive directly from their home to their first scheduled appointment to start their day and go right home after their last appointment. The employees were instructed to log into the Sears system to upload onto a company-supplied laptop data from their completed calls and download future assignments. Their complaint alleged that Sears unlawfully deprived them of pay for this at-home work time. (Actually, if the technicians had prevailed, Sears would have had to pay them not only for their "laptop time" but also for the time traveling to their first assignment and traveling home after their last.) In Chambers, a recent amendment to the Portal-to-Portal Act, which governed commuting to work in companysupplied vehicles, took center stage. In affirming summary judgment for Sears, the U.S. Court of Appeals for the Fifth Circuit ruled that the time spent uploading and downloading data was noncompensable because it was "incidental" to the technicians' principal activities. The court also ruled that because plugging in their laptops and logging into the Sears system would take no more than a "minute or so" each day, it was "non-compensable, as de minimis." Id. at 418.
SUGGESTED PRECAUTIONS Employers seeking to avoid pay liability for work done remotely after (or before) the normal workday on smartphones or other devices should take certain precautions. The first defense is to understand which employees are hourly or otherwise nonexempt because those employees must be paid for all time worked, whether before or after their regular workday, if the tasks performed are one of the "principal…activities" of their job, which is a term construed broadly by the courts. If business effectiveness justifies supplying company cellphones or PDAs to hourly or other nonexempt staff (or communicating with those employees on their own devices), the company should provide clear instructions as to how and when it expects employees to use those devices for work purposes. If after-hours business use is infrequent and amounts to no more than a few — and we mean, a very few — minutes a day, then the recordkeeping and compensation requirements would not apply whether the employee was using her own or a company-supplied device (although it may well be asked why the company would supply a device if it were only used for minimal business purposes). Under the Chambers analysis, allowing workers to call or log in briefly to confirm work schedules or appointments is likely to qualify as de minimis work that is difficult to track and, therefore, effectively noncompensable under the FLSA. If, however, there is more than minimal electronic communication with hourly or other nonexempt employees outside their regular workday, the company must maintain records of all the time worked. This is both a statutory obligation and the means to establish a defense to claims of unpaid wages or overtime. Employers should, therefore, maintain uniform policies for employees to record their work time, even remote and off-hours work that fails to comport with the outdated concept of punching in and punching out of a time clock at the start and end of each regular day of work. This policy must be effectively communicated to all employees who received a company 2
smartphone or PDA or who may use their own devices to perform off-premises, off-hours work, and it must be consistently enforced. In that way employers can rein in unapproved off-hours work and avoid the obligation to pay for that work, sometimes at the overtime rate. Michael Starr is a labor and employment law partner in the New York office of Holland & Knight. Katherine Healy Marques is a labor and employment associate in that office.
www.hklaw.com Holland & Knight LLP This article first appeared in the September 10, 2012 issue of The National Law Journal. Further duplication without permission is prohibited.
3
