Tuesday, April 22, 2008, 4:31 PM

Whose Time Is It?

Update to this blog entry (originally published April 16, 2008): The April 21st edition of the National Law Journal includes an article on this topic. See Blackberrys May Spur Overtime Suits (subscription only). More information to come on this topic.

The Wall Street Journal also comments: Are Blackberrys the Next Battleground in Wage-and-Hour Litigation?


Electronic connections - PDAs, cellular telephones, email, and even the older forms of communication - have blurred the lines between "work" and "nonwork" activities. Demands for round-the-clock availability, whether generated by the employer or born of employee desires, create new issues under federal and state wage-hour laws.

For nonexempt employees, whether salaried or hourly-paid, the question is relatively simple: If an employee is accessing work-related materials from a remote location, that activity is compensable. Although it may be prudent to establish a policy forbidding employees to check e-mail or make business calls outside normal business hours, that's not the end of the problem. If employees feel pressure to stay in touch, the existence of a written prohibition will not preclude employer liability. The no-overtime policy must be enforced, uniformly and vigorously, if there is to be any hope that time spent in electronic communication won't be paid time. The general rule remains that if the employer "suffers or permits" the employee to work, compensation is required, and if that pushes the employee past 40 hours in a work week, overtime pay is necessary. Employer protestations of lack of knowledge are not persuasive when there are retrievable tracks on the company's server or in the cyber-memories of other company-owned equipment, even though an employer's lack- of records results in the employee's guess being accepted.

Some measure of relief might - the emphasis is intentional - be buried in a January decision of the US Court of Appeals for the Second Circuit, Chao v. Gotham Registry, Inc. (see link: http://www.wcsr.com/resources/pdfs/flsa041608.pdf). The employer was a staffing service which furnished healthcare professionals who usually worked with no supervision or observation by the employer; the only record of time worked came from the professional employees themselves. (Note that the nurses employed by Gotham had been treated as independent contractors until 1992, when USDOL forced a consent decree under which overtime compensation had to be paid to them; use of the word "professional" here is, therefore, not meant to connote that the nurses were exempt salaried personnel.) This time around, two of the three appellate judges on the panel said that Gotham had violated the law again because it didn't do enough; instead, they suggested a variety of enforcement mechanisms to prevent the nurses from working overtime: keeping an "informal tally" and making reassignments, disciplining violators up to and including discharge, and refusing to pay unauthorized overtime. That's right - as Chief Judge Jacobs pointed out in a persuasive dissenting opinion, the employer could satisfy its obligation not to "suffer or permit" unauthorized overtime by violating its obligation to pay for time worked. The only saving grace for Gotham Registry was that it was not found in contempt of the 1992 consent decree. So if one wants to travel close to the brink of the abyss, try this one out and see how well the Department of Labor or the plaintiffs' bar reacts - just say no pay.

Returning to the electronic communications arena, consider the implications of the technological revolution on the exempt white-collar employee. The general rule is, of course, that exemption means the employee can (must) work as many or as few hours in a week as the employer requires (or as the employee wishes, if that's greater than what the employer demands), and that compensation will not vary based on the time worked. Leaving aside the various processes which can vary that model and afford additional compensation to the employee, let's look at the situations in which the employer can legally dock the pay: full days of absence due to personal reasons other than sickness or disability, and full-day absences due to illness in excess of those allowed under a bona fide plan. These exceptions contemplate the employee's performing no work at all that day; part-day absences aren't subject to docking. (The subject of bona fide plans based on hours or part days is far beyond this discussion.) What happens if the exempt employee is taking a personal unpaid day, or has exhausted the bank of sick days and is therefore unpaid? If the employer makes electronic contact, or the employee does so, can the exemption be lost? Is it even possible that an employee could game the system to destroy exempt status and become eligible for overtime pay? Stay tuned as this saga plays on; you may even be able to access it electronically.


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