For decades, there has been a lively debate as to whether paying non-exempt employees for out-of-town travel time in accordance with the federal Fair Labor Standards Act (FLSA) rules also satisfied the Washington Minimum Wage Act. For example, FLSA rules provide that travel which keeps an employee away from home overnight is worktime only when it cuts across the employee's normal working hours regardless of the day in question, and that travel from home to an airport is likely to be commute time.
In a surprisingly expansive decision, the Washington Court of Appeals, Division II, in Port of Tacoma vs. Joel Sacks, Director, Dep't L&I has ruled that under the Washington Minimum Wage Act, nonexempt employees must be compensated for all travel time for out-of-town work assignments—including all travel to and from the airport, all time spent at the airport, and all time spent in flight.
Washington employers will need to carefully review their policies and practices with regard to compensating nonexempt employees for out-of-town travel. The decision does not change the rules regarding compensation for regular or local travel and commuting during the workday.
Port of Tacoma is responsible for maintaining cargo cranes operated on its premises and employs crane maintenance mechanics for that purpose. The Port invited interested mechanics to volunteer to be part of a quality inspection team observing the manufacturing process in China. It arranged two trips from Seattle to China to observe manufacturing and one trip from Seattle to Houston to attend relevant training.
The Port arranged and paid for the trips and negotiated with the workers' union to reach an agreement that these hourly employees would be paid a maximum of eight hours a day straight time for travel to, from, and within China. One worker who flew to and from Houston to attend training was compensated for training time but not for flight time.
Court of Appeals Holding
In the court's view, the Port was required to pay the employees "for all of their time spent traveling"—including time spent traveling to and from the airport, for time the employees were not actively working while waiting in airports, and time spent on the flight—because this was out-of-town travel.
The court held that all out-of-town travel time is "hours worked" because it is "at the behest and for the benefit of the employer and is a necessary part of the assigned task." The time spent traveling is time the employees "would otherwise have been engaged in their own non-work activities," hence the Port employees were, in fact, "on duty."
Takeaways for Employers
Washington employers need to revisit their policies and practices with regard to compensating non-exempt employees for out-of-town travel. Compliance with the FSLA rules is no longer a defense to compliance with the Washington Minimum Wage Act when it comes to such travel time. To minimize risk and determine what flexibility, if any, an employer has with regard to payment of travel time for non-exempt Washington employees, employers should consult with experienced wage-and-hour counsel.
For non-exempt employees engaged in work assignments not involving out-of-town travel, the existing rules and guidance remain unchanged. As the Court of Appeals stated, cases such as the well-known Stevens vs Brink's Home Security (involving commuting from home in a company vehicle) are inapplicable because they "[do not] address the compensability of travel time for out-of-town work assignments" and are therefore distinguishable.
The procedural history of this case reflects the close call with regard to the extent out-of-town travel time constitutes "hours worked" under Washington law. The administrative law judge who initially heard the case granted the Port's motion for summary judgement and reversed the Department's notice of assessment.
The Department appealed to the Director of the Department, who reversed the administrative law judge's decision. The Port then sought judicial review in the Pierce County Superior Court. The superior court granted the Port's motion for summary judgement and reversed the Director.
The Department then appealed to the Court of Appeals, which reversed and reinstated the Department Director's order. Thus, based on the same facts, the Port won twice on legal grounds before two judges, and the Department won once on legal grounds before a three-judge panel of the Court of Appeals. Because the Court of Appeals had the last word to date, the Department prevailed in the end.
As of publication of this Advisory, the Port has not filed a petition for review by the Washington Supreme Court. But unless and until the Washington Supreme Court reaches a different result, employers should follow the holding of the Court of Appeals or risk an expensive and very risky lawsuit.
Controversial Deference to "Secret" Agency Guidance
In this case, the Department argued that the court should defer to the Department's interpretation set forth in the Department's Desk Aid, which stated the following:
Washington law is more favorable to employees than federal law. The federal Portal to Portal Act limits compensability of out-of-town travel to travel that takes place during the employee's normal work hours. The federal law also dictates that the trip to the airport or train station is considered a normal commute and is not compensable. In Washington, all travel time related to work is compensable, regardless of the hours when it takes place, and includes the time to get to the airport or train station.
If a person is required to travel to a training seminar in another city, the time from when the employee leaves their home until they arrive at their hotel in the other city is all compensable. Likewise, the time from when the employee leaves the hotel (or training facility) in the remote city until at their home is also compensable. If, on the other hand, the employee is required to report to work before they travel out of town, then the drive to work and home from the work at the end of the travel is considered normal commute time and is not compensable.
What made the Desk Aid interpretation controversial was that it is internal, informal guidance not available to the public. There is no indication in the Court of Appeals' opinion that the Port (or other employers) had awareness of the "secret" Desk Aid prior to receiving the adverse assessment from the Department's investigator.
The two judges who had ruled in favor of the Port believed that prior case law interpreting what is compensable "hours worked" in Washington did not support the Department's position regarding the out-of-town travel time in this case and did not defer to the Department's informal and unpublished Desk Aid discussion.
The Court of Appeals recognized it was not bound by the agency's interpretation because, as the Washington Supreme Court has said, courts have "the ultimate authority to interpret a statute [or regulation]." Nonetheless, the court expressly deferred to the Department's interpretation.
The Court of Appeals said that prior cases relied upon by the judges who had granted summary judgement in favor of the Port were distinguishable, the Department's interpretation enumerated in its unpublished Desk Aid reflected a plausible construction of the regulation on "hours worked," and the Desk Aid, although not published, had been the Department's "longstanding" internal policy.
Expect the court's deference to the Department's informal guidance to be regularly cited in future wage-and-hour litigation, whether by the Department in an enforcement action or by employees in an administrative complaint or private civil lawsuit.