Inc. make clear that employees, or
government agencies on their behalf, will continue to pursue these types of
claims through the courts.
These rulings warrant careful
attention by all businesses to how compensation practices match up with the
obligations to pay for time considered compensable under current interpretations
of the long-standing wage-and-hour laws.
Frederic Mendelsohn is a partner
with the law firm of Burke, Warren, MacKay & Serritella, P.C., in Chicago,
www.burkelaw.com. His practice involves complex commercial litigation and
dispute resolution; labor and employment law; market channel matters involving
dealers, distributors and sales representatives; and the general representation
of middle market business. For 12 years he was general manager of the Electronic
Distribution Show, and is intimately familiar with the electronic distribution
industry. He may be reached at 312-840-7004 or
fmendelsohn@burkelaw.com.
Resources
href=”http://www.dol.gov/esa/whd/”>Department of Labor Wage and Hour
Division
href=”http://a257.g.akamaitech.net/7/257/2422/08nov20051045/www.supremecourtus.gov/opinions/05pdf/03-1238.pdf”>Supreme
Court’s opinion
two steps removed from productive activity (such as that on the assembly line),
the Court found it neither integral nor indispensable to a principal activity
within the meaning of Steiner v. Mitchell. Effectively, the Supreme Court held
that until the employee is actually getting into protective gear and moving
toward the production floor (to undertake the principal activity), there is no
obligation under the FLSA to pay until the start of the beginning of the
continuous workday.
The consolidated cases were not,
however, a total defeat for business. Justice Stevens wrote in part based on
the twice-removed distinction that workers could not demand payment for time
spent waiting in line for equipment and safety gear, or waiting to punch in at
the time clock, when they first arrive for work, as such is preliminary time not
compensable under the FLSA.
This holding is consistent with
other cases over the years, finding that time spent in such de minimis
activities is not compensable.
Significance for
Distributors
While
it may seem that the law as to some off-the-clock cases is settled, questions
continue to arise. The plaintiffs’ bar will no doubt continue to pursue cases
where employers push the envelope in defining compensable time. Just this past
month, a jury in Berkeley, CA, found Wal-Mart liable for $172 million in damages
for failing to provide employees with meal breaks as required under state law.
Of that amount, $115 million was a
punitive damage award. While not a case arising under the FLSA, the distinctions
in such cases can become non-existent. Whether the wage-and-hour law in question
derives from state law and/or federal statutory law, the exposure for employers
with classes of workers deprived of payment of overtime, compensable time and/or
other rest and meal periods can be crippling, including potential punitive
damage awards and the payment of plaintiff attorney’s fees.
Moreover, inquiry into a company’s
compensation practices can come not only from disgruntled employees, the
plaintiffs’ class action bar and/or whistleblower organizations, but also from
both federal and state departments of labor.
In the past year or so, the federal
Department of Labor has obtained multimillion dollar settlements for call-center
employees owed additional compensation for time spent logging onto computers,
reviewing current work related briefings and preparing to make or take calls.
Considered to be compensable time by the Department of Labor, the Office of the
Solicitor has pursued recovery of this off-the-clock time.
Simply because the first call
hasn’t been made or taken doesn’t mean that the employees in call centers aren’t
entitled to be paid for time spent readying themselves to conduct their
production (much like the meat-packing employees who need to don and doff
protective gear as integral and indispensable to their principal activity).
Essentially, the same practices that led to the meat and poultry cases of the
last several decades have crept into new-economy jobs.
Distributors may ask if there are
middle-ground cases, where exposure may exist for the nature of their
businesses. The answer is not clear, but for those distributors who have special
production areas, and depending on the extent of equipment that may be involved,
there are cases where employers have been required to pay for time spent by
employees in “clean rooms” and other fabrication areas. Several cases held as
much in the mid-1990s relating to the fabrication rooms in Silicon
Valley.
While just a taste of what old (but
not outdated) wage-and-hour laws can hold in store for American business, IBP
Inc. v. Alvarez and Tum v. Barber Foods
In two cases, the high court
recently reinforced the idea that businesses have to compensate workers for the
time it takes to prepare for their work for example, the time it takes for
plant workers to change into protective clothing and safety gear. These rulings
warrant careful attention by distributors to how their compensation practices
match obligations to pay for time considered compensable under long-standing
wage-and-hour laws.
The U.S. Supreme Court began
its 2005-2006 term by unanimously siding with workers in two consolidated class
action lawsuits as to whether certain companies must pay plant workers for the
time it takes to change into protective clothing and safety gear and walk to
their work stations.
While cases involving protective
gear are not new, (they have been issues in meat and poultry plants for years),
the cases reinforce that employers depending in large part in what industry
the workers are employed remain exposed to claims by workers for
off-the-clock” time.
Over the years, distributors have
faced their share of wage-and-hour issues (such as the issue of paying inside
sales personnel overtime). These new cases, coupled with continuing recent
wage-and-hour cases, suggest that a wage-and-hour tune-up may well be in order
(if not a full blown audit on labor and employment law concerns).
New Chief
Justice
Interestingly, the href=”http://a257.g.akamaitech.net/7/257/2422/08nov20051045/www.supremecourtus.gov/opinions/05pdf/03-1238.pdf” target=_blank>two
unanimous decisions IBP Inc. v. Alvarez and Tum v. Barber Foods Inc. are
the first rulings under the leadership of Chief Justice John Roberts for the new
fall term, although the Chief Justice did not author the opinion.
Writing unanimously for the Supreme
Court, Justice John Paul Stevens authored the opinion based on decades-old
statutes the Fair Labor Standards Act of 1938 and the Portal-to-Portal Act of
1947 (collectively the “FLSA”). While 60-plus years old, the statutory framework
of these federal wage-and-hour laws continue to drive how American business must
compensate its employees, including in the more nebulous areas where workers may
be viewed by their employers as being “off-the-clock.”
In IBP Inc. v. Alvarez, the Supreme
Court held that the time that employees spent “donning” and “doffing” job
critical protective gear (what most people refer to as “putting on” and “taking
off”) such as mesh aprons, puncture resistant protective sleeves, plexi-glass
arm guards and plastic gloves and leggings was “integral and indispensable” to
the employees’ work, and was a “principal activity” for which employees are
required to be paid under the FLSA.
The Supreme Court also held that
attendant time that employees spend walking to and from the production floor
before and after the donning and doffing process is compensable, as is time
spent waiting to complete the donning and doffing process. While the Alvarez
decision has been said to be a defeat for business, it really squares with case
law (Steiner v. Mitchell) dating back to the mid-1950s, where the Supreme Court
held that the time spent by employees taking showers and changing in a battery
plant involving the use of caustic and toxic materials was “integral and
indispensable” to certain of the employees primary activities.
In Tum v. Barber Foods Inc., the
Supreme Court made an important distinction relative to employees who also had
to don similar protective gear. There, the issue was whether employees who are
waiting to change into the first piece of protective gear are entitled to be
compensated for this “pre-donning” time.
Holding that such waiting time is
