Originally Published by Max Kutner th 2023: Original Article can be found here.
(Law360) – Call center workers bringing wage and hour claims for off-the-clock work often face employers’ arguments that the time was de minimis, or too insignificant to be compensable, but workers’ attorneys see federal circuit court rulings and other factors as potentially changing that.
The de minimis doctrine, which provides an exception to the Fair Labor Standards Act requirement that employers pay for “all hours worked,” for trivial amounts of time, is under consideration in a Ninth Circuit case involving Customer Connexx LLC. The Tenth Circuit previously ruled on the issue, in a case involving Nelnet Diversified Solutions LLC.
In the case headed to the Ninth Circuit, call center workers are seeking to undo a Nevada federal judge’s May 22 summary judgment ruling that their computer boot-up time was de minimis. An appellate panel had already ruled in a published opinion in the case that the boot-up time was intertwined with their work, but it had remanded the de minimis consideration to the lower court.
The Ninth Circuit panel cited the earlier ruling from the Tenth Circuit in Nelnet, in which a panel held in 2021 that start-up time could be compensable and was not necessarily de minimis, a ruling that attorneys said appeared to be the first of its kind in call center litigation.
The Ninth Circuit is now set to address the de minimis doctrine standard and “whether it’s even valid anymore in this day and age of electronic timekeeping,” said Leah Jones of Thierman Buck Law Firm LLP, who represents the workers in the Customer Connexx case.
Here, Law360 explores the de minimis issue.
Favorable Rulings on Appeal
The Tenth Circuit and initial Ninth Circuit rulings were favorable to the call center workers, an indication that the issue is evolving in a way that is beneficial to them, workers’ attorneys said.
In the Tenth Circuit case, the panel cited a three-factor analysis from case law for determining if compensable time is de minimis. Those factors are the practical administrative difficulty for recording the time, the aggregate amount of the claim and whether the work happened on a regular basis.
At least one of those factors, the first prong, is increasingly in workers’ favor as technology makes it easier to record time, said Kevin Stoops of Sommers Schwartz PC, who often represents call center workers.
“Technology is wiping that prong out from the defendant every day,” Stoops said.
Such technological timekeeping changes make now the right time for circuit courts to weigh in on the issue, Jones said.
“It’s a good time for the circuit courts to review this issue and determine whether … the de minimis doctrine is antiquated or if it’s still a valid defense,” she said.
Employer Argument Remains
Despite those two circuit court rulings, attorneys on both sides said employers are continuing to raise the de minimis defense. They do so at various points in litigation, including on summary judgment and also outside of motion practice, attorneys said.
“Whether defense counsel talks about it at the get-go, like in a motion to dismiss, we know we’re going to get those types of pushback and defenses from defense counsel and from the employer, so we plan our litigation accordingly,” Jones said.
Employers are likely continuing to raise the argument because courts largely have remained receptive to it.
Courts have long supported the doctrine, going back as far as 1946, just several years after Congress passed the FLSA. In Anderson v. Mt. Clemens Pottery Co. , which the Tenth Circuit panel cited in its Nelnet ruling, the U.S. Supreme Court held that “split-second absurdities are not justified by the actualities of working conditions, or by the policy of the Fair Labor Standards Act.”
In 2014, the late U.S. Supreme Court Justice Antonin Scalia hinted at potential demise of the doctrine, writing in the opinion for Sandifer v. United States Steel Corp. that “a de minimis doctrine does not fit comfortably within the [FLSA], which, it can fairly be said, is all about trifles.”
But employers have continued to bring the argument, and courts have remained open to it, including the Second Circuit, the Seventh Circuit and the Nevada federal court in the case now returning to the Ninth Circuit.
Courts such as the one in Nevada seem to be applying common sense, said Mark Wallin of employer-side firm Barnes & Thornburg LLP.
“A lot of times, that’s really what it comes down to,” Wallin said. “Does it take someone 10 minutes to 30 minutes to log into a computer? Maybe it is the case for older computers, but I think now it’s not the case.”
De minimis remains a significant defense, as long as employers lay the groundwork to be able to use it, Wallin said. That groundwork can include discovery, having effective timekeeping policies in place and enlisting experts to perform time studies, he said.
Though employers’ arguments in courts in the Ninth and Tenth Circuits that booting up computers is not integral and indispensable and therefore compensable “are tough sledding now,” Wallin said, “the de minimis argument is still alive and well.”
States Change Scope
Two state Supreme Court rulings in recent years have contributed to the evolving de minimis landscape, and more statewide changes could follow through legislation.
In 2021, the Pennsylvania Supreme Court held that the de minimis doctrine does not apply to wage and hour claims under state law.
That ruling followed one by the California Supreme Court in 2018, in which the state justices held that the state wage and hour law did not recognize the de minimis doctrine.
In such jurisdictions, “it does take a defense off the table,” Wallin said. “It changes strategy.”
Those rulings don’t apply to the FLSA. But the U.S. Department of Labor addressed the doctrine’s application to federal law in a regulation, saying that “insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded.”
Another state went somewhat the other way, enshrining the doctrine into state overtime law.
In April 2022, Republican Ohio Gov. Mike DeWine signed into law S.B. 47, which mainly deals with whether a worker must opt into an overtime lawsuit to become a plaintiff.
But the law also includes an exemption to overtime pay under state law for “activities requiring insubstantial or insignificant periods of time beyond the employee’s scheduled working hours” before or after the principal work activity. This is consistent with the federal Portal-to-Portal Act, management-side attorneys have said.
Wallin said generally that legislation that strengthens the de minimis doctrine would be beneficial for employers.
“If there is a law, a codification of the de minimis doctrine,” he said, “I do think that would be helpful.”
–Additional reporting by Irene Spezzamonte. Editing by Tim Ruel and Neil Cohen.
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