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Overtime Implications for Employers Issuing Smartphones
By Elizabeth M. Garcia on October 1, 2013

The Fair Labor Standards Act (“FLSA”) continues to serve as one of the most popular sources of claims against employers. Modern technology, such as smartphone and other electronic devices, provide employees with certain flexibility to work from anywhere at any time. This technology, however, is generating new and more creative claims for overtime under the FLSA. 

The Fair Labor Standards Act (“FLSA”) continues to serve as one of the most popular sources of claims against employers. Modern technology, such as smartphone and other electronic devices, provide employees with certain flexibility to work from anywhere at any time. This technology, however, is generating new and more creative claims for overtime under the FLSA. Cases in Illinois and New York are of particular interest, as their outcomes may have significant monetary implications public and private employers. Employers that allow, recommend or mandate their non-exempt employees to use technology outside of working hours, must compensate their employees for said time in accordance with the FLSA. Employers who do not know that their employees are responding to work emails after hours are not immune from the FLSA or its liability. Employers should considering policies and procedures to insulate them, as much as possible, from similar litigation and costs.

In Allen v. Chicago, #10-c-3183, a police officer claimed violations of FLSA because for three years the City issued police officers electronic devices which they were required to use to perform work outside the normal working hours and for which they received no compensation. He alleged that police work was routinely and regularly accomplished through the use of the devises, and that “[w]ithout these PDAs and the work routinely performed while off-duty, the Chicago Police Department would be far less successful in accomplishing its law enforcement mandate and goals.” According to the Northern District of Illinois, “Sergeant Allen alleges that he received numerous telephone calls, e-mails, voicemails, and text messages work orders on his PDA while off the clock, and was expected to respond to these communications throughout the night and into the early morning hours while off duty,” and was not compensated for said work.

In Kuebel v. Black & Decker Inc., 643 F.3d 352 (2011), the Second Circuit U.S. Court of Appeals ruled that a lower court judge erred in dismissing a claim for unpaid wages for hours similarly worked “off the clock”. The case is on remand to the lower court for trial.

Generally, the FLSA mandates that employers pay “covered employees” overtime for time worked in excess of forty (40) hours in a work period [1].  Exempt employees are not “covered employees” [2].  While the FLSA does not define the word “work”, the United States Supreme Court concluded that work is “physical and mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily for the benefit of the employer and the employer’s business.”  Tennessee Coal, Iron RR v. Muscoda Local No. 123, 321 U. S. 501 (1956). This includes off-duty work that is an “integral and indispensible part of the employee’s activities.” Steiner v. Mitchell, 350 U.S. 247 (1956).

Some cases have examined claims for overtime that is negligible. In 1946, the United States Supreme Court accepted the de minimus doctrine to deal with negligible amounts of work. Anderson v. Mt. Clemens Potter Co, 328 U.S. 680 (1946). In instances of negligible amounts of work, the Court has determined that overtime compensation is not necessary under the FLSA if three factors are met: “(1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.”  Lindow v. United States, 738 F.2d 1057 (9th Cir. 1984). Work that takes less than ten to fifteen minutes in the aggregate is generally seen as de minimus. Id.

Another important requirement under the FLSA is that the employer maintain records sufficient to determine wages, hours and other conditions and practice of employment for “on and off the clock work”.

To potentially avoid claims, similar to those raised in Allen and Kuebel, employers should provide Smartphones or other electronic devices to exempt employees only. This, however, is not possible in all instances.  In those situations where the employer provides electronic devices to non-exempt employees, the employer must establish a clear policy that sets forth the parameters in which a employee can work outside his or her normal working hours, including but not limited to whether the employee must obtain written permission before being permitted to work outside business hours, how to keep track of time spent working outside normal business hours, etc. The employer and employee must keep strict records of the time spent working, without exception. Another alternative for the employer is to draft a policy that prohibits employees from performing work related duties outside of their working hours [3]. Once the employer determines what is in its best interest and a policy is created, it should conduct training on the policy.

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[1] The FLSA provides partial exemptions from overtime for police and fire in some instances. A partial exemption can be found in section 207(k) of the FLSA which provides that employees engaged in fire protection or law enforcement may be paid overtime on a “work period” basis.  The employer, after negotiations with a union, is responsible for setting the “work period.” A “work period” may be from seven consecutive days to 28 consecutive days in length. For example, fire protection personnel are due overtime under such a plan after 212 hours worked during a 28-day period (53 hours in a seven-day work period), while law enforcement personnel must receive overtime after 171 hours worked during a 28-day period (42 hours in a seven-day work period).

[2] An employee’s job title does not determine whether an employee is exempt under the FLSA. The employer is required to determine whether an employee is or not exempt by examining the employee’s salary and duties. Just because the employer calls an employee an executive, administrative or professional does not automatically create an exemption. In fact, some studies suggest that about half of U.S. employers incorrectly classify their employees as exempt.

[3] Note, however, that this type of policy is not a sure way to prevent overtime liability or a violation of the FLSA. If the employer knows or should know that an employee is working outside of works hours, the employer may still be liable for overtime pay and any penalty associated with the Act.

Tags: FLSA
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