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Appeals Court Decision Reminds Employers that FLSA Requires Pay for ALL Hours Worked

October 31, 2022

By Michael Burns, courtesy SBAM Approved Partner ASE

Employers often ask ASE about breaks for non-exempt salaried or hourly employees and whether they must be paid. Generally, they should be paid if the break is less than 20 minutes in duration (Sec. 785.18 Rest). Meal periods of at least 30 minutes can be unpaid (Sec. 785.19 Meal).

Employers also often ask about whether workers must be paid if they clock in later than the appointed start time for work. Generally, and as long as no work is allowed to be performed, it is recommended an employee can be “docked” pay in 6-minute increments if they perform no work during that time.

But what about brief amounts of time spent working before clocking in or maybe after clocking out? The Fair Labor Standards Act (FLSA) requires pay for all hours worked. It excuses brief periods when accounting or tabulating the time would be administratively burdensome. What does that mean?

In 2021 the Tenth Circuit Court of Appeals Court ruling (Peterson v. Nelnet Diversified Solutions LLC) looked at the question of when an employer failed to compensate non-exempt/hourly workers properly for brief periods of time at the start of the workday when the employee had to allow the timekeeping system to boot up. Was this worktime?

The company argued this brief period of time everyday was “de minimis.” But the Court looked at three factors to decide if such time to account for was administratively burdensome under the law and therefore did not have to be paid. This was the wrong way to look at it the Court said. The Court said employers have to look at:

  • How difficult it is to measure the time.
  • How many minutes or hours are at stake for each worker and all workers impacted collectively
  • Whether they perform the tasks on a regular basis

In this case, the employer did not pay for the approximately three minutes it took where the employee was waiting for the timekeeping system to boot up on their computer in order to clock in and start their workday. The Court (overruling a lower Court that found no issue with not paying the workers for this time) found that the time was not administratively burdensome to record (factor 1) and could be accounted for rather feasibly. In this case, the Court found that the employer’s conclusion that accounting for this time was difficult was not supported.

The third factor of whether the workers performed the pre-work task on a regular basis or as a regular component of the job was viewed by the Court as integral to the call center job.            

As for the second factor, the Court in this case did not see how many minutes or hours being at stake impacting the more critical question of what is worktime? It therefore found that question was not a factor in their decision. The Court found that the first and third factors were really what mattered in this case.

Employers should keep in mind that this decision is based upon the federal wage and hour law (FLSA). State laws may vary, and in turn could supersede the federal law if stricter. California is one state that would not exclude de minimis time and requires pay for all time worked, “no matter how trivial.”

Michigan follows federal law but states that hours worked must be “computed to the nearest tenth of an hour, or other finer measure.” (Sec R. 408.702) Per the above situation, this seems to provide leeway and time worked determination would then defer to federal law (FLSA) as interpreted by the Courts as to when those hours start for timekeeping purposes.

Employers are advised to review their timekeeping methods or systems to understand how hours worked is defined. Understanding that the safest hours worked method is to consider all time performing work as well as short breaks (less than 20 minutes) is paid time. Under the FLSA, any time the employee has no real freedom to leave and do other non-work activities is most likely paid time under the FLSA.

Also keep in mind the principles of “waiting to be engaged” or Off Duty.  This is where a worker is completely relieved from duty and this time is long enough to enable him/her to use their own time effectively for their own purposes. Contrarily, “engaged to be waiting” or On Duty is when a worker must be “waiting and unable to use the time effectively for their own purposes.” That time “belongs to and is controlled by the employer.” It is therefore hours worked for pay purposes.

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