The on-demand economy of the 21st century creates numerous challenges for employment lawyers and their small business clients. The U.S. labor laws that govern minimum wage and overtime date to the New Deal—the Fair Labor Standards Act (FLSA) was passed in 1938! Needless to say, the economy of 2018 looks quite a bit different from the economy of 80 years ago.
Changes in employment
One area that can create considerable confusion is what counts as “compensable” work time—that is, what time must an employee be paid for in a workday. The FLSA was passed in an era when most workers showed up to the same worksite each day and put in a shift. The workday may include short breaks and meal breaks, but the parameters of what time was “work” were not difficult to decipher.
That era has been replaced by the modern economy, in which workers are mobile and they respond in real-time to customer needs. Consider the Postmates, Uber Eats, Grubhub, and DoorDash driver. The driver logs into an app, then is assigned to pickup and deliver food when needed. There will most certainly be downtime where the driver is just waiting for a new order.
Does the employer have to pay the delivery driver for their down time in-between appointments? This question is becoming increasingly common as technology has made it easier for businesses to respond in real-time to customer needs and create more flexible work schedules. The employment laws, however, have remained the same, and so these questions can become tricky. Employment lawyers are expected to overlay New Deal era labor laws on the facts of the 21st century on-demand/sharing economy.
What employers need to watch for
The potential pitfall to the employer? Any employee who is not paid for all compensable work time could bring a class (or collective) action for unpaid wages against not only the company, but also the owners of the company, seeking double their unpaid wages and attorney’s fees.
What is compensable work?
So how to evaluate what is “compensable” work time? Well, breaks in the workday schedule can be categorized into three groups:
- Meal breaks of at least 30 minutes, which are typically time that the employer does not have to pay the employee (so-called “noncompensable” time);
- “Short” rest breaks of “about 20 minutes” or less, which the U.S. Department of Labor says are typically compensable time; and
- Break periods which are neither meal breaks nor “short” rest breaks, which might or might not be compensable time.
This third category is where the gray area lies. The determination of whether the break periods are compensable depends on application of the “waiting time rule” that looks to “the extent to which the employee is restricted in her ability to use the time for personal pursuits.”
Engaged to be waiting vs. waiting to be engaged
Whether an employee is entitled to pay for time spent waiting depends, in large part, on the manner in which the idle time is spent. If the idle time is spent predominantly for the benefit of the employer, the employee is said to be “engaged to be waiting” and is entitled to compensation. On the other hand, if the time primarily benefits the employee, the employee is “waiting to be engaged” and is entitled to compensation only for that time spent in productive work. Put another way, the critical issue in determining whether an employee should receive compensation for idle time is whether the employee can use the time effectively for his or her own purposes.
Determining whether the time at issue was spent predominantly for the benefit of the employer (or the employee) requires a “practical approach based on the realities of the case.” There is no hard-and-fast rule to determine the dividing line between compensable and non-compensable time. For that reason, it’s helpful to look at specific cases that have addressed similar questions to your scenario.
I did a survey of the caselaw to look for an answer. If a short rest break of 20 minute is typically compensable time, how about a break of 30 minutes? 45 minutes? 2 hours? Where is the line between compensable and non-compensable time?
While I was unable to find compelling precedent from the federal courts in North Carolina (and the Fourth Circuit) other federal courts have looked at the issue and provided some guideposts. The relevant decisions come from cases in which assembly lines in factories shut down (creating wait times to restart work) and municipal bus drivers who work “split shifts” (i.e., a morning and afternoon shift).
A consensus appears to be developing that would suggest wait time of up to an hour are compensable time. But this is not a hard-and-fast rule, and each situation must be evaluated on its own merits by an attorney. Here’s a summary of my survey of the caselaw.
Wait times in assembly lines
In Mireles v. Frio Foods, Inc. 899 F.2d 1407 (5th Cir. 1990), the plaintiffs were workers on an assembly line at a frozen-food packaging facility. The employees were batched into shifts and would arrive at work at scheduled start times. On occasion, the employees would arrive at the facility according to their scheduled start times, but they would be required to wait to clock-in until produce was available to run the assembly lines (and begin productive work). Also, during the day, paid work would stop when there were delays in the arrival of produce or a mechanical failure in the plant. The question was whether the employer was required to pay the employees for the time spent waiting to work on the assembly line.
The Fifth Circuit held that Frio had to pay the employees for wait times of up to 45 minutes. In reaching this conclusion, the court found that it was difficult for the employees to use shorter periods of time for their own personal benefit. Most of the employees commuted to work (i.e., the plant was not located near their homes), and the nearest convenience store to the plant was around two miles away. The court therefore concluded that periods of time up to 45 minutes were not spent predominantly for the benefit of the employee, and that during this time the employees were “engaged to wait” and entitled to compensation for their idle time. Mireles is the most employer-friendly case on point, in that the court drew the line at only 45 minutes.
In a similar case, Cole v. Farm Fresh Poultry, Inc., 824 F.2d 923 (11th Cir. 1987), the court found that the employees needed at least one hour to use the time effectively for their own purposes. The employees in Cole worked on an assembly line at a poultry processing plant. Like the assembly line in Mireles, the assembly line here occasionally would break down (or the plant otherwise would suspend operations). In these instances, the company would notify the employees that they were free to do as they pleased until a specified time when the plant would be scheduled resume operations. The question was the same as in Cole: for how long of a break period was the company required to pay the assembly line workers?
In reaching its decision, the court found that most of the plaintiffs lived 10 to 20 minutes from the plant and carpooled to work each day. During down times in the operation of the assembly line, most employees waited in the break room at the plant. Some of the workers who lived in the vicinity would go home; others occasionally went to a local convenience store for a snack.
The Eleventh Circuit held that the defendant-employer was required to compensate employees for breaks of up to one hour. This was the court’s holding even though a compliance officer from the Wage and Hour Division of the U.S. Department of Labor had given oral advice to the company that contradicted the court’s decision. The DOL officer told the company that it was required to compensate employees for their time only if the assembly line was down for 30 minutes or less (but not for inactive periods of more than 30 minutes). In rejecting the oral advice of the DOL officer, the court held that 30 minutes was not long enough for employees to use the time effectively for their own purposes.
Split shifts of bus drivers
Another source of potential guidance comes from cases involving “split shifts” in the same workday. The courts have addressed the issue of compensability of time between “split shifts” in a small handful of opinions, including those involving bus drivers who work a morning rush-hour shift and then return to work for an afternoon rush-hour shift.
In United Transportation Union Local 1745 v. City of Albuquerque, 178 F.3d 1109 (10th Cir. 1999), the plaintiffs were city bus drivers, most of whom split shifts to accommodate peak scheduling. The drivers were shuttled from a relief point at the end of the morning shift to the central bus station, and then later shuttled back to a relief point to begin the afternoon shift. During the split-shift break periods, the bus drivers were permitted to do anything they wanted, except drink alcohol. Some went home; some slept in parks. Others ran errands or passed time in the city library or museum. Others still read a book or ate a meal. The split-shift periods varied in duration and could be as long as three to five hours. For the purposes of reaching its conclusion, the court assumed the split-shift periods were “at least one hour.”
The Tenth Circuit noted that the question of the compensability of this time was a “novel question” before that court. Ultimately, the court concluded that time spent which was one hour or more between shifts was not predominantly for the benefit of the employer, and therefore was not compensable time. In reaching this conclusion, the court looked to the federal regulations relating to “on duty” and “off duty”, reiterating the fact-specific nature of each case like this: “Whether the time is long enough to enable him to use the time effectively for his own purposes depends upon all the facts and circumstances of the case.”
The court emphasized that an employee 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.” This requirement was met by the city in the scheduling of bus drivers. The court opined, “The fact that the split shift period is less convenient or less desirable than a straight shift does not mean that the drivers are on duty and deserving compensation during that shift; it simply means that their work schedule is not ideal.” Lastly, the court reasoned, “The fact that courts have held that employees who are on-call, and definitely more restricted in their ability to pursue personal pursuits than the bus drivers here, are nonetheless not on duty, further supports our conclusion.”
Taken together, the above cases suggest that the federal courts in North Carolina may adopt a rule that draws the line between compensable and non-compensable break time at one hour. However, other cases exist that would support an argument that one hour is not sufficiently long for employees to put the time to their own use—again the inquiry is fact-specific.
In Vega v. Gasper, 886 F. Supp. 1335 (W.D. Tex. 1995), farm workers sued their employer for time waiting in the fields and time waiting to receive their cash wages. The employer bused the migrant workers to the fields each day where they would arrive very early in the morning, about one hour before sunrise. The farm workers waited in the dark fields until the sun rose. The employer did not begin paying the workers until they began harvesting chiles at sunrise. At the end of the work day, the employer made the farm workers wait up to two hours before they were paid for their work and bused back home. The court ordered the employer to make payments to the farm workers for all of this waiting time.
In reaching this decision, the court noted that the chile fields were isolated—30 minutes away from the nearest town—and the farm workers had no form of transportation to use the time for their own purposes. The court also noted that the payroll system was highly inefficient. The workers waited while the boss trekked to the bank in town to cash the check he was paid by the farmer, before returning to the fields and distributing the cash to the workers while they waited in line. The court found that this payroll system was unreasonable and benefited the boss—and in any event the workers could not use any of the waiting periods for their own purposes.
Another case that provides a cautionary tale is Lassen v. Hoyt Livery, Inc., 120 F. Supp. 3d 165 (D. Conn. 2015). Limousine drivers brought suit against their employer for failing to pay them for the time spent waiting between assignments. The court’s ruling resulted in the employer being responsible for paying their drivers for up to three hours or more of wait time. As with all cases on this topic, it is important to look at the specific factual circumstances, which were rather unique in this case. The employer-defendant in the case argued that “if a driver drove from New Canaan [Connecticut] to John F. Kennedy International Airport (“JFK”) to drop off a customer at 9:00 a.m., and his next assignment was to pick up a different customer from JFK at 12:00 p.m. and return to the New Canaan area, the three-hour window between the two trips would not be compensable work time.” The court rejected this argument: “As the uncontradicted record evidence reflects, however, taking someone to JFK typically takes two hours, and ‘coming out of JFK in the morning, it’s anywhere from two to three hours.’ As a result, this driver is significantly constrained in how he or she may use his or her waiting time and is thus unable to use this time effectively for his or her own purposes. Thus, this waiting time properly should be considered compensable time.”
The court reasoned, “Ordinary waiting time between runs is compensable time. The relevant inquiry is not whether plaintiffs’ duties prevented them from engaging in any and all personal activities during waiting time; rather it is whether the time is spent predominantly for the employer’s benefit or the employee’s.” The decision continues, “When periods of inactivity are ‘unpredictable’ and ‘usually of short duration,’ and the employee ‘is unable to use the time effectively for his own purposes,’ then the employee is ‘engaged to wait,’ and the inactive time constitutes ‘work’ time under FLSA.”
The unique facts in that case supported the conclusion that the drivers could not use the waiting time for their own purposes—even for periods up to three hours: “The record evidence in this case shows that, while waiting between assignments, limousine drivers must ‘stay in proximity to the vehicle,’ ‘stay dressed’ in uniform, and be ready to take on an unexpected new assignment in the interim or otherwise risk losing the assignment they were already waiting for. In addition, such drivers are not typically allowed to ‘use the vehicle for personal use.’ Under such conditions, a driver could not use the waiting time ‘effectively for his own purposes.’”
There is a separate line of caselaw for on-call workers, which will be saved for another day and another blog post. As always, this blog post should not be accepted as legal advice. If you have questions about your company’s employment law practices, or believe that your employer owes you unpaid wages, contact our attorneys below to schedule a consultation. Spengler & Agans offers a flat-rate legal checkup for startups and business needing a broad, overall legal review of their business and business practices.