*Please note: Since the initial publication of this advisory on Sept. 14, 2009, the 9th Circuit withdrew and significantly modified this original decision. Please see our updated advisory: "Rutti v Lojack Redux: The Compensability of Commute Time and Home Computer Activity Continues to Confound."
The availability of laptop computers, PDAs and cell phones has made off-site working easy to do. These realities raise a number of human resource concerns, not the least of which are determining when nonexempt employees must be paid for time spent traveling from their homes to customer sites, and when they must be paid for incremental time spent working outside of normal working hours (such as to “check e-mail”). Helpful guidance on these issues has recently been provided by the U.S. Court of Appeals for the 9th Circuit in a case called Rutti v. Lojack Corporation.1
Federal and most state wage-and-hour laws require that employees be paid for all "hours worked.” For example, federal regulations provide that “[a]s a general rule the term ‘hours worked’ will include: (a) all time during which an employee is required to be on duty or be on the employer’s premises or at a prescribed work place and (b) all time during which an employee is suffered or permitted to work whether or not he is required to do so.”2 California regulations define “hours worked” as “the time during which an employee is subject to the control of an employer, [which] includes all the time the employee is suffered or permitted to work, whether or not required to do so.”3
Twenty-five years ago, in Lindow v. United States, the 9th Circuit interpreted federal law to require that employees be compensated for activities that are an “integral and indispensable part of the principal activities for which [they] are employed” no matter when the work is performed, unless the activities are de minimis. The court established a three-pronged test to determine de minimis:4 (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.”5 This test reflects a balance between requiring an employer to pay for activities it requires of its employees and the need to avoid “split-second absurdities” that “are not justified by the actuality of the working conditions.”6
Rutti was an employee who installed and repaired vehicle recovery systems. He worked out of his home in California, driving a company vehicle to customer sites. He sued for compensation for the time he spent traveling from home to the first customer and from the last customer back to his home, each day (“commute time”). He also sued for “off-the-clock work,” that is, for various activities that he performed from home before his first appointment and at the end of the day. The trial court rejected all of Rutti’s claims, and Rutti appealed.
Company-Car Commute Time
The 9th Circuit first analyzed Rutti’s commute time and found it not to be compensable under either federal or California law. Even though the company required Rutti to use the company car and restricted its use to business-related activities, the time Rutti spent driving was deemed “incidental” to his employment rather than being a “principal activity.” Thus, it was not “hours worked” under federal law.7 Applying California law, the court deemed the commute time not to be so “subject to the ‘control of the employer’” as to make it working time, in spite of the vehicle requirements and restrictions. 8
Computer Activity from Home
The court next examined Rutti’s before-work activities: checking the computer for his daily assignments and then mapping his route. These were found not to be “principal activities” and therefore not compensable as work time. Even if this was work time, the court said the time was de minimis under the Lindow test because the activities took only a minute or so.
Rutti’s after-work activities were a different story, however. Although he had flexibility as to when it was done, Rutti was required to transmit data to the company’s computer, using the company’s modem, every day in order to complete the day’s work. Rutti estimated that this could take as long as 15 minutes because the transmission sometimes did not go through the first time. The court held this activity to be an “integral and indispensable part” of Rutti’s job and, therefore, to be compensable time unless it was de minimis.
Applying the first prong of the Lindow test, the court deemed “the practical administrative difficulty of recording the additional time … [to be] closely balanced” between Rutti’s position and the company’s position. The other two prongs, however, “the aggregate amount of compensable time, and the regularity of the additional work,” were deemed to favor Rutti. The court therefore reversed the decision in favor of the company and sent the case back to the trial court for further evidence on the after-work activities.
Lessons Rutti Teaches
One of the challenges of wage-and-hour law is that state law can override federal law; so even if something is permitted, or is not compensable under federal law, the opposite may be true under applicable state law. But with that caveat, the Rutti decision provides some helpful lessons for California employers.
One: You probably do not have to pay employees who work from their homes for the time they spend traveling to their first work site of the day and from their last work site of the day, even if you require them to use a company vehicle. As long as employees are not required to perform significant duties during this period, their drive time should not be compensable.
Two: You probably do not have to pay employees for the time they spend checking e-mail or voice mail, or going onto the company’s Web site, for such incidental work-related activities as getting their daily assignments or checking their work schedules. This is especially true if these activities take only a few minutes.
Three: You will have to pay employees for the time they spend working from an off-site location that is directly connected to their job duties, such as accessing the company’s computer to effect, or to verify, the completion of a work assignment, unless the time spent is de minimis. Whether it is de minimis will depend on the regularity and duration of the task, and how difficult it would be to track it.
1 Rutti, et al. v. Lojack Corp., No. 07-56599, slip op. (9th Cir. Aug. 21, 2009).
2 29 C.F.R. § 778.223.
3 The IWC Wage Orders generally define “hours worked” this way. Employers who work in the health care industry and who are covered by Order 4 or 5 and employees required to reside on the employment premises are subject to special definitions. DSLE Opinion Letter 1998.12.23 (Dec. 23, 1998).
4 Lindow v. United States, 738 F.2d 1057, 1060 (9th Cir. 1984) (quoting Steiner v. Mitchell, 350 U.S. 247, 256 (1956)); see also 29 C.F.R. § 790.8(a).
5 Lindow, 738 F.2d at 1060.
6 Id. at 1062 (quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946)).
7 The court examined the Employee Commuting Flexibility Act, 29 U.S.C. § 254(a) (2), a 1996 amendment to the Portal-to-Portal Act, and found both the language of the statute and its legislative history to compel this result.
8 Cf. Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000)(if the employee is required to drive to a reporting point and then to ride in a company vehicle from there to the work site, the time may be sufficiently “subject to the employer’s control” to make it compensable work time under California law).