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What happened?

On July 10, 2024, the United States Court of Appeals for the Ninth Circuit affirmed in Cadena v. Customer Connexx LLC, that under the Fair Labor Standards Act (FLSA) employers are not required to pay wages for work performed before or after scheduled work hours when the amount of time is “de minimis.” 

What are the details?

The de minimis rule: Under the FLSA, brief and uncertain periods beyond scheduled work hours, which are impractical to record for payroll, may be ignored. These insignificant periods, termed as de minimis by courts, are justified by industrial realities and only apply when they last a few seconds or minutes.

The Background

• Defendant: Customer Connexx LLC runs a Las Vegas call center for an appliance recycling firm.
  • Its employees, who either interact with customers or supervise agents, clock in/out each shift using computer software. They do not have personal workstations (first come, first served) and often deal with slow computers.
  • Connexx’s policy requires readiness for calls before the shift starts but disallows early clock-ins by 7+ minutes.

• Plaintiffs: 2 employees sought unpaid overtime for time spent booting computers outside clocked-in hours.
• The district court twice granted summary judgment to Connexx, ruling the time as de minimis under the FLSA, despite an appeal and remand from the Ninth Circuit. The plaintiffs have appealed again.

• For a more detailed breakdown.

The Court Process & Decision

• In assessing whether work time is de minimis, the Ninth Circuit considered three factors. It is the responsibility of the employer to demonstrate this. Each of these factors was examined sequentially by the Court:
  • “The regularity of the additional work”
  • “The aggregate amount of compensable time”
  • “The practical administrative difficulty of recording the additional time”

• The employees argued for the general invalidity of a rule, not just in the context of work attire and equipment.

• The Court disagreed, stating that no court precedent has universally invalidated the de minimis rule under the FLSA due to its different section from the overtime provisions.

• Conclusion: the Ninth Circuit upheld the de minimis rule based on established U.S. Supreme Court and Ninth Circuit case law.

Takeaways for Employers

The Ninth Circuit’s ruling in this case confirms the use of the de minimis rule as a defense beneficial to employers.

However, the Court’s decision underscores the responsibility of employers:
(1) demonstrate that the work time truly qualifies as de minimis and does not warrant compensation, and
(2) accentuate that consistent unpaid time, regardless of its small or fluctuating quantities, could accumulate to substantial sums that require compensation and do not fall under the de minimis category.

Business Considerations

• Employers should take a closer look at this decision which emphasizes the importance for employers to accurately record and compensate for all work-related time, including initial tasks like booting a computer.
• Although the de minimis doctrine may apply in certain cases, employers should be proactive and take notice of the trend towards recognizing such tasks as payable, and examining time rounding suggests it should be used sparingly.
• Employers should ensure FLSA compliance by reviewing timekeeping practices and mandating pay for all work hours, including delays due to computer issues.
• Employers should consider implementing a system for employees to report delays, provide timekeeping training, and assess the time needed for essential applications to start up.

Source References

• Cadena v. Customer Connexx, LLC

Resources

• De Minimis Rule: FLSA Hours Worked Advisor

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