On August 13, 2018, in Ehret v. WinCo Foods, the California Court of Appeal held that a provision in a collective bargaining agreement (“CBA”) regarding employees’ meal periods during shifts lasting between five and six hours effectively waived employees’ rights under California Labor Code section 512. In so holding, the Court held that the waiver in question passed the “clear and unmistakable” standard used to determine whether a provision in a CBA is intended to waive a statutorily protected right. Although WinCo argued that the “clear and unmistakable” standard only applies to waivers of “non-negotiable” rights, not “negotiable” rights like a meal break for shifts between five and six hours, the Court avoided that question and found that, even assuming that the standard applies to waivers of any statutory right, negotiable or non-negotiable, the waiver in the WinCo CBA was “clear and unmistakable.”

California Labor Code section 512(a) states, in part: “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.” (Emphasis added.)

The WinCo CBA in question provided: “Employees who work shifts of more than 5 hours will be provided a meal period of at least 30 minutes, except that when a work period of not more than 6 hours will complete a day[‘]s work, a meal period is not required…. It is WinCo Foods policy not to mutually agree with employees to waive their lunch period.” (Emphasis in original.)

The Court held that the agreement effectively waived employees’ meal periods because it explicitly stated that no meal period is required for shifts of under six hours. Because that provision was “flatly irreconcilable” with Labor Code section 512, the Court held that it was a “clear and unmistakable” waiver of that statutory provision. Importantly, the Court distinguished cases that concern arbitration clauses in CBAs, which have held that statutory rights must be clearly stated in the agreement before they can be waived. The Court also rejected the employees’ contention that, under Choate v. Celite Corporation, 215 Cal. App. 4th 1460 (2013), to be valid, the waiver must either cite to the applicable statute explicitly or “specify the content of the statutory right.” Rather, the Court interpreted Choate to hold that the waiver need only “mention” the statutory protection.

The Court found of no import that the CBA also stated: “It is WinCo Foods policy to not mutually agree with employees to waive their lunch periods.” The Court held that that section of the agreement referred to waivers by individual employees, and had no effect on the collective waiver in question. The Court also flatly rejected the employees’ argument that a waiver must explicitly use the words “waiver,” “waived” or “waiving.”

This decision is welcome news to employers that have similar provisions in their CBAs. However, it is not binding upon other Courts of Appeal, and should the California Supreme Court decide to review the issue, it may well reach a different conclusion.

On July 18, 2018, the Ninth Circuit issued a published opinion in Rodriguez v. Taco Bell Corp., approving Taco Bell’s on-premises meal periods for employees who choose to purchase discounted food.

Like many food services employers, Taco Bell offers discounts on its food to its employees. And it requires that employees consume such food on premises.

In Rodriguez, employees contended that requiring employees to consume discounted meals on premises results in a meal period or unpaid wage violation, arguing that employees must be relieved of all duty and must be permitted to leave the premises during a statutory meal period. The Ninth Circuit rejected those arguments.

As the Court explained, Taco Bell employees were not required to purchase meals – “[t]he purchase of the meal is entirely voluntary.” And the “requirement that [a discounted] meal be eaten on the premises was to ensure that the benefit was utilized only by employees and that the food did not leave the premises to be given to friends and family.” That is, “employees had to consume the discounted food in the restaurant to prevent theft.” As the Court noted, Taco Bell “employees are free to purchase meals at full price and eat them wherever the employees wish.”

The Ninth Circuit concluded that Taco Bell satisfied its meal period and wage obligations by relieving employees of all duties during their meal periods and exercising no control over how or where they spent their meal periods. That is, “employees were free to use the meal break time as they wished, and that a requirement to remain on the premises was imposed only if an employee voluntarily chose to purchase a discounted meal.” And there was no evidence that Taco Bell “required or pressured [employees] to conduct work activities while on premises during the meal period.” The policy actually prohibited that, requiring employees who purchased discounted meals to eat them away from the food production and cash register area.

The Ninth Circuit’s Rodriguez opinion confirms that employers that relieve employees of all duty during meal periods do not violate California law merely by imposing certain requirements to benefits (e.g., discounted food) that an employee may voluntarily accept.

In most wage and hour cases, each workweek gives rise to a separate claim, at least for statute of limitations purposes. Thus, an employee seeking payment for alleged off-the-clock work or an independent contractor claiming misclassification and entitlement to overtime ordinarily may seek back wages and related recovery only for work performed within a set amount of time—usually two to six years preceding the filing of the complaint, depending on the jurisdiction—preceding the filing of the complaint. But what happens to the statute of limitations when a plaintiff tries to bring a class action under state law, the court denies class certification, and a new plaintiff seeks to bring a subsequent class action presenting the same claims?

On June 11, 2018, the Supreme Court provided the answer in China Agritech, Inc. v. Resh. In short, the Court held that although a class action suspends the running of the limitations period for individual potential class members who subsequently seek to join a suit or to file their own individual case, the class action does not permit the filing of subsequent time-barred class actions.

American Pipe Tolling

The Supreme Court first addressed the interplay of class actions and statutes of limitations more than four decades ago. In American Pipe & Construction Co. v. Utah, the Court concluded that a timely-filed complaint seeking relief on behalf of a class under Rule 23 of the Federal Rules of Civil Procedure suspends the running of the statute of limitations for potential class members, and that, upon the denial of class certification, members of the unsuccessful class may intervene in the original case without erosion of their claims to the statute of limitations. 414 U.S. 538, 544, 552-53 (1974).

Nine years later, the Court concluded that so-called American Pipe tolling applies not only when members of the pleaded class intervene in the original suit, but also when they file their own individual cases. Crown, Cork & Seal Co. v. Parker, 462 U.S. 345, 350, 353-54 (1983). An open question following American Pipe and Crown, Cork is whether these tolling principles also apply to subsequent class actions.

The Supreme Court’s Ruling

In China Agritech, a company’s stock price dropped following public disclosure of allegedly fraudulent conduct by the company. Claims accrued on February 3, 2011, and on February 11, 2011, a plaintiff filed a putative class action under the Securities Exchange Act of 1934, which provides for a two-year statute of limitations. The court denied class certification in May of 2012, and the original case settled in September 2012, leading to dismissal.

The following month, the same counsel filed a second putative class action against the company alleging the same claims on behalf of a new named plaintiff. The court again denied class certification, leading to another settlement and dismissal.

On June 30, 2014—more than two years after the February 3, 2011 accrual of the claims—yet another plaintiff, represented by new counsel, commenced a third putative class action, which made its way to the Supreme Court. The district court dismissed the complaint as untimely, holding that the first two class complaints did not toll the time to bring further class claims. The U.S. Court of Appeals for the Ninth Circuit reversed.

The Supreme Court granted certiorari to resolve a three-way split among the federal appellate courts on the tolling issue. The Court framed the question presented as follows: “Upon denial of class certification, may a putative class member, in lieu of promptly joining an existing suit or promptly filing an individual action, commence a class action anew beyond the time allowed by the applicable statute of limitations?” (Slip Op. at 2.) Justice Ginsburg’s answer, in a decision joined by seven other justices, was that “American Pipe does not permit the maintenance of a follow-on class action past expiration of the statute of limitations.” (Id.)

The Court noted that the reason for American Pipe tolling for individual claims is that “economy of litigation favors delaying those claims until after a class-certification denial. If class certification is granted, the claims will proceed as a class and there would be no need for the assertion of any claim individually.” (Slip Op. at 6.) If a court denies class certification, “only then would it be necessary to pursue claims individually.” (Id.)

But when a case involves class claims, “efficiency favors early assertion of competing class representative claims. If class treatment is appropriate, and all would-be representatives have come forward, the district court can select the best plaintiff with knowledge of the full array of potential class representatives and class counsel.” (Slip Op. at 7.) In cases in which “the class mechanism is not a viable option for the claims, the decision denying certification will be made at the outset of the case, litigated once for all would-be class representatives.” (Id.)

The Court cautioned that the plaintiffs’ “proposed reading would allow the statute of limitations to be extended time and again; as each class is denied certification, a new named plaintiff could file a class complaint that resuscitates the litigation.” (Slip Op. at 10.) The Court observed that although “[t]he Federal Rules [of Civil Procedure] provide a range of options to aid courts” in managing complex litigation, “[w]hat the Rules do not offer is a reason to permit plaintiffs to exhume failed class actions by filing new, untimely class actions.” (Id. at 14-15.)

The Concurrence

Concurring in the judgment only, Justice Sotomayor took issue with the Court’s holding as applied to cases outside the securities context. She addressed several differences between the procedures required by the Private Securities Litigation Reform Act, including publication of notice of the filing of a putative securities class action, designed to encourage active participation early in the case by other potential lead plaintiffs and counsel, not required for other class actions under Rule 23. (Concurrence at 2-4.) Justice Sotomayor agreed with the denial of tolling in the case before the Court, but she would have limited the ruling to cases subject to these additional procedural requirements and would not have issued a decision applicable to all Rule 23 cases. (Id. at 1, 7.)

What the Decision Means for Employers

In light of China Agritech, employers should expect courts to reject the use of American Pipe tolling to allow plaintiffs in wage and hour putative class actions to seek relief for workweeks that are outside the applicable limitations period. Courts will likely continue to allow individual claims for those otherwise time-barred workweeks when supported by American Pipe tolling. In addition, courts may continue to allow subsequent class actions by members of previously denied classes, but without the benefit of tolling. As always, employers faced with a wage and hour putative class action should carefully consider all available defenses, including the statute of limitations as to individual and class claims.

Tips Do Not Count Towards the Minimum Wage Unless a Worker Qualified as a “Tipped Employe"It is a common practice for employers to provide their employees with rest breaks during the work day.  (And in some states, like California, it is required by state law.) But under what circumstances is an employer required to pay its employees for break time?

In U.S. Department of Labor v. American Future Systems Inc. et al., the Third Circuit Court of Appeals was asked to decide whether the Fair Labor Standards Act requires employers to compensate employees for breaks of 20 minutes or less during which they are free from performing any work.

The employer in that case produced business publications that were sold over the telephone by sales representatives.  The sales representatives could log off of their computers and take breaks whenever they chose and for any length of time.  They were free to leave the premises.   However, if the employees were logged off their computers for more than 90 seconds, they were not paid for the break time.

The Department of Labor (“DOL”) filed suit against the company.  The DOL relied on 29 C.F.R. § 785.18, which states:

Rest.

Rest periods of short duration, running from 5 minutes to about 20 minutes, are common in industry. They promote the efficiency of the employee and are customarily paid for as working time. They must be counted as hours worked…

The District Court for the Eastern District of Pennsylvania granted partial summary judgment to the DOL, concluding that section 785.18 created a “bright-line rule” and the company violated the FLSA by failing to pay its employees for rest breaks of twenty minutes or less.  The company appealed to the Third Circuit.

The company argued that the DOL was attempting to enforce the wrong regulation, and instead the court should apply 29 C.F.R. § 785.16 to its break policy.  That regulation states:

Off duty.

Periods during which an employee is completely relieved from duty and which are long enough to enable him to use the time effectively for his own purposes are not hours worked.  He is not completely relieved from duty and cannot use the time effectively for his own purposes unless he is definitely told in advance that he may leave the job and that he will not have to commence work until a definitely specified hour has arrived.  Whether the time is long enough to enable him to use the time effectively for his own purposes depends upon all of the facts and circumstances of the case.

The company contended that the “off duty” regulation should apply.  The company pointed out that its policy was completely flexible, allowed employees to take as many breaks as they wanted for as long as they wanted, allowed them to be completely relieved of all duties and created no obligation to return to work.  Therefore, the company argued that under the facts and circumstances of the case, even breaks of less than 20 minutes were not compensable.

The Third Circuit disagreed.  It stated that the “off duty” regulation provides a general rule regarding the compensability of hours worked, but section 785.18 is a more specific regulation that carves out an exception to the general rule.  The Third Circuit held that section 785.18 establishes a bright-line rule that employers must pay their employees for any rest breaks of 20 minutes or less.

To date, it does not appear that any other Circuit Court has weighed in on this issue.  That another Circuit might reach a different conclusion is certainly possible.  And it is also possible that the Supreme Court may have the final word on this issue.

In many industries, sales are subject to ebbs and flows.  Sometimes the fish are biting; sometimes they aren’t.

A common device that employers with commissioned salespeople use to take the edge off of the slow weeks and to ensure compliance with minimum wage and overtime laws is the recoverable draw.  Under such a system, an employee who earns below a certain amount in commissions for a given period of time, often a week, receives an advance of as-yet unearned commissions to bring the employee’s earnings for the period up to a specified level.  Then in the next period, the employees’ commissions pay off the draw balance before the employee receives further payouts of commissions.  Occasionally, employees challenge these recoverable draw pay systems.

In Stein v. hhgregg, Inc., the U.S. Court of Appeals for the Sixth Circuit considered one such draw system.  The employer, a retail seller of appliances, furniture, and electronics at more than 220 stores nationwide, paid its salespeople entirely in commissions.  In weeks where an employee worked 40 or fewer hours and did not earn commissions sufficient to cover minimum wage for the week, the employee would receive a draw against future commissions sufficient to bring the employee’s earnings for the week up to minimum wage.  In weeks where the employee worked more than 40 hours, and did not earn sufficient commissions to cover one and a half times the minimum wage, the employee would receive a draw against future commissions sufficient to bring the employee’s earnings for the week up to one and a half times the minimum wage.  The purpose of this pay structure was, among other things, to achieve compliance with the overtime exemption in section 7(i) of the Fair Labor Standards Act (“FLSA”) for certain commissioned employees of a retail or service establishment.  The company’s policy also provided that upon termination of employment, an employee will immediately pay the company any unpaid draw balance.

Two employees of a store in Ohio brought a putative nationwide collective action under the FLSA, as well as a putative state law class action asserting unjust enrichment with respect to the company’s more than twenty-five locations in Ohio.  They alleged failure to pay the minimum wage or overtime based on the theory that offsetting draw payments against future commissions amounted to an improper kick-back of wages to the employer.  They also claimed that the employer did not pay for certain non-sales activities and encouraged employees to work off the clock.  The complaint did not specifically allege that the two named plaintiffs worked off the clock or that the one plaintiff who was a former employee had to repay a draw balance when his employment ended.  The district court granted the company’s motion to dismiss, concluding that there was no FLSA violation and declining to exercise supplemental jurisdiction over the state-law claims.

On appeal, after reviewing extensive interpretive guidance from the U.S. Department of Labor, the Sixth Circuit rejected the plaintiffs’ central theory that a recoverable draw amounts to an impermissible wage kick-back.  To the court, the key consideration is that under the pay system at issue, “deductions will be made from wages not delivered, that is, from future earned commissions that have not yet been paid.”  Because the company does not recover wages already “delivered to the employee,” the court “h[e]ld that this practice does not violate the ‘free and clear’ regulation.  See 29 C.F.R. § 531.35 (emphasis added).”  (Op. at 9-10.)

The divided panel reversed, however, in certain other respects.

First, the court determined that the FLSA section 7(i) overtime exemption does not apply because although the company’s pay plan provides for a minimum rate equal to one and one half times the minimum wage for any week where an employee works more than 40 hours, the exemption technically requires, among other things, a rate that is more than one and a half times the minimum wage.  (Note: federal minimum wage is $7.25 per hour, and 1.5 times that rate is $10.875 per hour.  Strictly speaking, a wage of $10.875 does not satisfy this aspect of the exemption, whereas $10.88 per hour does.  Perhaps on remand it will turn out that the company actually paid $10.88 per hour rather than $10.875, as it would be very unusual for an employer to use a pay rate that does not round up to the nearest cent.)

Second, the panel majority held that the company’s policy of requiring repayment of a draw balance upon termination of employment violated the FLSA as an improper kick-back.  This part of the decision is interesting because the majority parted ways with the dissenting judge and the district court over the issue of policy versus practice.  The complaint did not suggest that either named plaintiff actually paid back any draw balance, and at oral argument it became clear that the company never enforced that policy and, in fact, had eliminated the repayment policy during the litigation.  The dissenting judge, like the district court before him, believed that because the company had never applied the policy to the named plaintiffs, the policy would not support a claim for relief.  The majority, however, took a more expansive approach to the matter.  “Incurring a debt, or even believing that one has incurred a debt, has far-reaching practical implications for individuals.  It could affect the way an individual saves money or applies for loans.  An individual might feel obligated to report that debt when filling out job applications, credit applications, court documents, or other financial records that require self-reporting of existing liabilities.”  (Op. at 15.)  In short, the court arguably opened the door to allowing plaintiffs to bring FLSA claims even where they have suffered no injury cognizable under the FLSA, so long as the policy they challenge could potentially cause them other types of consequential damages beyond those covered by the FLSA.  This aspect of the ruling appears to be a first of its kind in FLSA jurisprudence.

Third, the panel majority concluded that the plaintiffs adequately alleged minimum wage and overtime violations based on the assertions regarding the company’s knowledge and encouragement of working off the clock.  Although the dissent pointed out that the complaint contained no allegation that either named plaintiff actually suffered a minimum wage or overtime violation as a result of working off the clock, the majority focused on the alleged practice, rather than its specific application to the named plaintiffs, determining that “Plaintiffs have alleged sufficient facts to support a claim that this practice violates the minimum wage and overtime requirements of the FLSA.”  (Op. at 19.)

This decision provides several lessons for employers:

  • Generally speaking, the FLSA allows for the concept of a recoverable draw against commissions.  Recovering a draw against future commissions is not automatically an impermissible wage kick-back.  (Note that there may be certain restrictions under state law, and under some conditions a recoverable draw may violate the FLSA.)
  • When relying on the FLSA section 7(i) exemption, ensure that the policy is clear that an employee will receive more than one and a half times the federal minimum wage for any workweek in which the employer will claim the exemption.
  • Closely review any policies regarding recovery of draw payments (or, indeed, any other types of payments) upon an employee’s termination.  Such policies are often subject to challenge, and they can serve as a trigger for claims by demanding a payment right at the time when a departing employee may cease to have an interest in maintaining a positive relationship with an employer.
  • Be very careful about policies or practices that may arguably encourage employees to work off the clock.  Employers should have clear written policies prohibiting employees from working off the clock, and employees and supervisors should receive periodic training on those policies.

In a much anticipated filing with the Fifth Circuit Court of Appeal in State of Nevada, et a. v. United States Department of Labor, et al, the United States Department of Labor has made clear that it is not defending the Obama Administration’s overtime rule that would more than double the threshold for employees to qualify for most overtime exemptions. However, the Department has taken up the appeal filed by the previous Administration to reverse the preliminary injunction issued blocking implementation of the rule, requesting that the Court overturn as erroneous the Eastern District of Texas’ finding, and reaffirm the Department’s authority to establish a salary level test. And the Department has requested that the Court not address the validity of the specific salary level set by the 2016 final rule because the Department intends to revisit the salary level threshold through new rulemaking.

The litigation stems from action taken by the Department in May 2016 to issue a final rule that would have increased the minimum salary threshold for most overtime exemptions under the Fair Labor Standards Act (“FLSA”) from $23,660 per year to $47,476 per year. The rule was scheduled to become effective on December 1, 2016, but a federal judge issued a temporary injunction blocking its implementation just days beforehand.

Section 13(a) of the FLSA exempts from the Act’s minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional [(“EAP”)] capacity * * * [specifically providing,] as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor].” 29 U.S.C. § 213(a)(1). To be subject to this exemption, a worker must (1) be paid on a salary basis; (2) earn a specified salary level; and (3) satisfy a duties test.  In enjoining the 2016 rule, the District Court for the Eastern District of Texas reasoned that the salary-level component of this three-part test is unlawful, concluding that “Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level,” and that the statute “does not grant the Department the authority to utilize a salary-level test.”

In seeking reversal of the preliminary injunction, the Department has argued that the Fifth Circuit expressly rejected the claim that the salary-level test is unlawful in Wirtz v. Mississippi Publishers Corp. In Wirtz, the Court reasoned that “[t]he statute gives the Secretary broad latitude to ‘define and delimit’ the meaning of the term ‘bona fide executive * * * capacity,” and he rejected the contention that “the minimum salary requirement is arbitrary or capricious.”  Further, the Department argues that every circuit to consider the issue has upheld the salary-level test as a permissible component of the EAP regulations.

By many accounts, the Department’s recently-appointed Labor Secretary, Alexander Acosta, has made clear that he does not think the salary level should be at $47,476 per year, but rather set at a more reasonable level between $30,000 and $35,000 per year. While Secretary Acosta may disagree with the salary level of the 2016 rule, the Department’s brief seems to make clear that he wants to ensure that he has the authority to set any salary threshold.

In issuing the preliminary injunction, the District Court did not address the validity of the salary level threshold set by the 2016 rule. Because the injunction rested on the legal conclusion that the Department lacks authority to set a salary level, it may be reversed on the ground that the legal ruling was erroneous. As a result, by requesting that the Fifth Circuit not address the validity of the salary level set by the 2016 rule, should the Court reverse the preliminary injunction without ruling on the salary level’s validity, it is unclear whether the 2016 rule will immediately go into effect pending new rulemaking. Employers need to stay tuned.

The new episode of Employment Law This Week offers a year-end roundup of the biggest employment, workforce, and management issues in 2016:

  • Impact of the Defend Trade Secrets Act
  • States Called to Ban Non-Compete Agreements
  • Paid Sick Leave Laws Expand
  • Transgender Employment Law
  • Uncertainty Over the DOL’s Overtime Rule and Salary Thresholds
  • NLRB Addresses Joint Employment
  • NLRB Rules on Union Organizing

Watch the episode below and read EBG’s Take 5 newsletter, “Top Five Employment, Labor & Workforce Management Issues of 2016.”

One of the featured stories on Employment Law This Week – Epstein Becker Green’s new video program – is that there will be no BlackBerry overtime pay for cops in Chicago.

A federal magistrate judge in the Northern District of Illinois ruled that time spent by Chicago police officers actually answering emails on their BlackBerries was work eligible for overtime. However, “monitoring” of their BlackBerries was not work because the officers were still free to use the time predominantly for their own benefit. Regardless, the judge found that the City did not know the employees were doing any work, and the officers failed to report it, so the workers were not entitled to any compensation. There is reportedly a plan to appeal. In mid-2015, the Wage & Hour Division requested information regarding the use of portable electronic devices by employees outside of scheduled work hours, so this issue is one to watch.

See below to view the episode and watch “What’s Behind the 2015 Increase in FLSA Lawsuits?” on our blog.

 

As our readers know, for the purposes of certain blog entries, I have unilaterally declared that I am the Secretary of Labor.

Effective immediately:

  1. The “computer professional” exemption applies to anyone with a salary of at least $800 per week whose primary duty requires “highly specialized knowledge of computers and software.”  The exemption now includes employees who provide help desk services, troubleshooting support, or who install hardware or software.
  2. In regard to New York law, building owners who provide free apartments to their janitors can still count the value of the apartment as wages.  However, that value is no longer based on the rental rate of the apartment on June 1, 1975.
    • Building owners will be credited with the current fair market value of the apartment, and janitors will be paid on an hourly basis.
    • As under federal law, a New York janitor who resides in the employer’s building is not considered as working all the time he is on the premises.  Any reasonable agreement of the parties as to the number of hours worked will be accepted.
  3. To clarify: time spent waiting for a security bag check at the end of a shift is not compensable “hours worked.”Generally, time spent going to or coming from work is not working time.  Preliminary and postliminary activities may be compensable if they are “integral and indispensable” to an employee’s principal duties.  However, general security does not relate to anyone’s particular duties, so it’s not compensable.
  4. California law is preempted.  It’s just time.
  5. The ability to use mobile devices for business communications while an employee is away from the workplace is a benefit to the employee as well as the employer.  Therefore, using a mobile device to read or respond to electronic communications for less than 20 minutes per day shall be considered de minimis amount of time and therefore shall not be compensable

Let’s get to work.

 By Michael Kun

At virtually every point in time, we have thought of ourselves as being technologically advanced. 

Older readers of this blog will recall the first time they ever saw a calculator.  It was the size of a paperback novel, it cost more than $100, and it was spectacular.  It was unfathomable that anyone would ever design anything more advanced.  Now, you can get a calculator at the checkout stand of your local supermarket for about $2.  And you will probably raise a few eyebrows if you buy one, if only because most people have no need for calculators.  They are built right into most laptop computers, tablets and smartphones – devices that only science fiction writers could possibly have dreamed of.

As a result of all of these technological advances, many employees work in front of a computer screen, and most have tiny computers in their shirt pockets, briefcases or purses at all times. 

In other words, most employees are no more than inches away from the internet, from email and from a phone at any moment during their working days. 

And employees cannot resist the temptation of those devices.  (How long was it after the introduction of the Blackberry before the first person referred to it as a “Crackberry”?)

How often have you been at a store, only to find the sales clerk off in a corner on a personal call on his or her smartphone, or checking emails?

How many times have you walked past a co-worker’s desk as he or she hurries to change the screen so you won’t see the fantasy football standings, or the webpage for a bookstore, or a social media site, or a lengthy exchange of emails with friends?  (Full disclosure: had you walked into my office 5 minutes ago, my browser was open to www.espn.com.  Specifically, the major league baseball page.)

Some employers have tried to minimize time spent in these activities by putting up firewalls on their computers.  What has this done?  It has led to discontented employees, who have just turned to using their smartphones for such activities.

Some employers have tried to put an end to time spent on smartphones at work.   What has been the result?  More discontent from employees, who take their smartphones to the restrooms or hallway.  While I personally can only attest to what I have observed in men’s rooms, I have little doubt that women’s rooms are quite similar — people having personal telephone calls, often about exceedingly private matters, or clicking away on their smartphones, while others try to remain quiet or wait patiently to use the restroom for its intended purpose.  (I won’t comment on how downright weird it is for you to be talking to someone while you’re in the restroom other than to say that any time I get a call from someone and hear a flush in the background, everything he or she has just said immediately loses 20% of its value.  And I become much more cautious about discussing anything confidential with them when I know they are on a smartphone.)

While most employers try to minimize such personal activities, few have been able to stop it entirely.  And most understand the serious morale issues that would follow were they to try. 

Like it or not, employees are going to continue to use some work time each day on personal emails and calls, and on social media or the internet.

They’re going to continue to shop online when no one is looking.

They’re going to play fantasy football or fantasy baseball while they’re on the clock. 

They’re going to check their social media sites to see if someone has posted a new picture of a cat or shared the most recent “Which member of One Direction are you?” quiz.  (Full disclosure:  apparently, I am Harry.  Fuller disclosure: with a soon to be eight-year-old daughter, I know all of One Direction’s songs far too well and can actually name all of the band’s members – first and last names.  And feel free to quiz me on Taylor Swift or anything on the Disney Channel or Nickelodeon.)

Most employers understand all of this and, within reason, tolerate it.  It is a part of doing business in the second decade of the twenty-first century.

But it also raises a wage-hour issue that few employers think about:  if an employee has to work an additional hour of overtime because he spent an hour of the workday dealing with his fantasy football team, why should the employer have to pay for that time – and at an overtime rate, to boot?

 Why?

If you say, “Because the employee was on the employer’s premises,” try again.  An employer doesn’t have to pay an employee for all of the time he was on its premises.  If the law were otherwise, employees could grant themselves significant raises just by showing up for work a few hours early each day and reading the newspaper in the break room or taking a nap in a nice warm corner at the end of each day. 

And if you say, “The employer should have to pay because it didn’t catch the employee playing fantasy football, or shopping, or whatever,” ask yourself if that is what you really want – management standing over an employee’s shoulder all day or otherwise monitoring the employee’s ever workday activity to make sure the employee is not taking advantage.  You don’t want Big Brother in the workplace.  Don’t pretend you do. (A personal note: if you believe the reference to “Big Brother” relates to a TV show by that name, I’d encourage you to pick up the seminal George Orwell novel 1984, wherein the phrase was born.)

Practically speaking, this hypothetical – the employee who works an hour of overtime because he spent an hour on the clock playing fantasy football – speaks to the need for management to try to minimize such personal activities in a way that does not hurt employee morale.  The time spent on such entirely personal activities is costly, particularly where it leads to unnecessary overtime at overtime rates.  Every time the employee who makes $20 per hour spends an hour engaged in such personal activities, the employer has effectively paid him or her $20 for doing so.  And if they have to work an hour of overtime because they spent an hour playing fantasy football, that costs the employer an additional $30 – time-and-a-half of the employee’s regular rate. 

In other words, the employer has just paid the employee $30 to play fantasy football.  Or to shop.  Or to check Facebook. 

Where this really hits employers is in litigation.

We have written many times in this blog about the prevalence of wage-hour class actions and collective actions.  Many of them contend that employees were not paid for all of the time they worked.  Many claim that employees performed a few minutes of work before their shifts began, or after they ended.  They seek to be paid for an additional 10 minutes per day, or 15, or 20, or more.  And they seek statutory penalties.  And, always, attorney’s fees. 

But what if that same employee who contends he was shortchanged by 10 minutes of pay per day spent 30 minutes each day on social media, or shopping, or playing fantasy football, or exchanging personal emails?

Isn’t there something so clearly wrong about an employee who has been paid for engaging in personal activities turning around and seeking additional compensation under such circumstances?

Hasn’t that employee already been overpaid

Having had the pleasure of representing a great many companies in the defense of wage-hour class actions, I am always pleasantly surprised to see that most employers take a very realistic approach to the workplace, that they understand that employees probably spend some time engaging in these activities.

And I am often unpleasantly surprised to see how much time the people who sue spend in such activities, and how they believe it is their right to do so and to be paid for it – and to seek more money on top of it.

The employee who made thousands of personal telephone calls while on the clock still thinks she is entitled to more pay for a few minutes she claims she worked at the end of her shift.

The employee who regularly napped while being paid still thinks he should be paid more.

The employee who has his ugly fantasy football championship trophy on his desk forgets that his employer not only paid him for much of the time he spent earning that trophy, but had to pay him for overtime, too, because he didn’t get his work done during the business day. 

The employee who has box after box of merchandise shipped to the workplace thinks he is not only entitled to be paid for the time he spent online, but for more time.

In the litigation context, shouldn’t the time employees spend in personal activities be weighed against the additional time for which the employee is seeking recovery?

If an employee contends he or she was not paid for 6 minutes of off-the-clock work each day, but the employer can show that he or she spent 30 minutes a day engaged in personal activities, shouldn’t that employee recover nothing?

Very generally speaking, the courts haven’t weighed in on this issue yet. 

But someday, perhaps soon, they will.

And if they begin subtracting the time spent on personal activities on their smartphones or laptops from an employee’s claim the he or she was not paid for all of the time worked, they are likely going to find that many of the employees claiming they were underpaid were actually overpaid. 

That just makes sense, doesn’t it?

In this way, perhaps technology will meet its match in something that has been around for centuries – logic.