Recently, the federal district court in Minnesota allowed a collective action filed by call center employees to proceed in an example of how employers can end up playing with fire through over-aggressive time deductions, particularly when employees are idle and “engaged to be waiting” under the FLSA. The employees worked around the country at various call centers operated by a product support service provider. The complaint alleged that the employer used a timekeeping system that tracked not only their log-in and log-out times (a potential proxy for start and end times of shifts), but also any “idle” time during shifts of two minutes or longer. The company deducted pay for these incremental times, but the employees contended that this time was not truly “idle” time, but time spent attending meetings, waiting to be engaged by an incoming call, helping coworkers, or taking their ostensibly paid rest breaks.
To get the docked time back, the employer allegedly required employees to file reimbursement claims with managers, who apparently frequently refused to grant them, or did so only in part. The employees filed suit, asserting over 20 state wage and hour law violations in Minnesota, Arizona, New York, and Ohio, as well as a nationwide collective action under the FLSA. They filed a motion seeking conditional certification–a low bar to clear–and the employer moved for judgment on the pleadings. The defendant’s challenges failed, and the case offers two good takeaway reminders for employers.
Idle Time Does Not Mean Noncompensable Time
Among other arguments, the call center employer argued that employees’ employment agreements did not provide any right to be paid for idle time or break time, and that it could therefore treat this time as noncompensable. As the court explained, the FLSA regulations mandate that rest breaks of under 20 minutes must be counted as hours worked. 29 C.F.R. § 785.18.
On the second issue, under the FLSA regulations, time designated by an employer as “idle” may be compensable if it occurs after an employee commences a principal activity and before the employee performs the last principal activity during the work day. (29 C.F.R. § 790.6(b), an issue explained in detail in the Supreme Court’s 2005 IBP, Inc. v. Alvarez decision. Although this more typically comes up in situations where an employee is on call, the FLSA’s regulations draw a critical distinction between a worker who is “waiting to be engaged” and one who is “engaged to wait” (as in this case of employees waiting for the next call to come in at the call center). The latter worker is entitled to compensation for the time spent waiting, while the former may not be. The distinction may be obvious in some cases, such as where an employee is free to go about his or her business for hours at a time and only rarely is called to duty. The key point is the nature of the time spent waiting. In the call center–at least for purposes of the judgment on the pleadings–deductions of a few minutes here and there plausibly signals employees who are unable to effectively use the time spent waiting for their own purposes. Under the FLSA, this means that the time essentially belongs to and is controlled by the employer, meaning the time spent waiting is an integral part of the job. As such, the employees are engaged to wait, and are therefore entitled to be compensated for their time. That’s precisely what the court found at this early stage.
The takeaway point for employers here is not to put too fine a point on timekeeping practices. At conferences, I often remind employers to keep the compensation and discipline buckets separate. This situation is an extension of that. Concerns about employees’ efficient use of time should be addressed through changes in workflow, staffing levels, or, in the case of abuses, discipline. Repeatedly docking pay for a few minutes here and there is a recipe for class and collective action litigation. However, even less egregious examples of pay deductions for what are really workflow and disciplinary matters can lead to the same kinds of liability. This case is a great (if somewhat extreme) reminder of that.
Conditional Certification is a Very Low Bar
The Minnesota court also granted the employees’ motion for conditional certification of a FLSA collective action. The employer fought this motion, too, but had a difficult battle, to say the least. When considering whether to conditionally certify a class, courts routinely recite a very basic two-step analysis: have the plaintiffs shown that potential class members are “similarly situated” and can make a “modest factual showing” that they and their putative class members were victims of a “common policy or practice.” It is well recognized in courts that plaintiffs have a very minimal burden at this early, mostly pre-discovery stage of the lawsuit. While it is possible to defeat conditional certification motions, I mention this step because employers’ better focus is on correcting the practices that create potential liability. Defending a collective action is never a “win,” even if you are successful in the litigation.