A recent case from the U.S. Tenth Circuit Court of Appeals discussed what preshift activities count as time worked under the federal Fair Labor Standards Act, or FLSA. Under the FLSA and its regulations, the minutes and hours that employees work are considered “hours worked” and are thus compensable. Although that may seem straightforward, employers often run afoul of the FLSA because they fail to count certain tasks as hours worked. For example, the sometimes-mundane tasks such as answering phone calls or helping customers during a lunch break would typically count as hours worked and thus be compensable time.
FLSA regulations provide that if the task is a “principal activity” or is “integral and indispensable” to the principal activity that the employee is employed to perform, then it is considered compensable time, such as the case recently decided in the Tenth Circuit.
In Peterson v. Nelnet Diversified Solutions, LLC, over 300 current and former employees sued for failing to pay them overtime for the time devoted to booting up their work computers and launching certain software needed for their work before clocking in. The court ultimately decided that the preshift time spent by employees booting up their computers and launching software was compensable time, and thus considered unpaid overtime in weeks where an employee otherwise worked 40 hours or more, because such “preshift activities are integral and indispensable” to their principal duties of communicating with borrowers of student loans, such that the preshift activities are compensable under the FLSA.
The issues decided in this case are not new, as many employers have struggled with determining which activities that employees engage in are compensable, and tracking and paying employees for that time. Similar to the employer in Peterson, many employers have failed to accurately track the amount of time worked by employees, which can lead to not just unpaid time, but also unpaid overtime. Thus, this case should serve as a reminder for all employers the importance of accurate timekeeping, such that an employer uses accurate time worked information when determining pay obligations, including overtime pay. It should also serve as an opportunity to review your organization’s policies on what activities are considered compensable time, what employees should do if they believe they are not being paid for all hours worked, and the employer’s timekeeping systems in general. Wage and hour lawsuits are some of the most common filed against employers, and if an employee or group of employees prevails, their attorney fees are often ordered to be paid by the employer, and that’s in addition to up to twice the value of the unpaid overtime.