Compensible Time Under FLSA

Which hours count and which don’t; changes to the MCA exemption

Under the Fair Labor Standards Act (FLSA), employers generally are required to pay an employee overtime for each hour worked in excess of 40 during a single workweek at a rate of one and one-half times his regular hourly rate¹. However, the hours an employee spends at the office or other worksite are not the only consideration. There is “on-duty,” “off-duty” and “on-call” time. And there is “travel” time.

HOURS WORKED

The compensation that an employer owes to an employee is based largely upon the number of hours the employee works. As a rule of thumb, “hours worked” includes: (a) all time during which an employee is required to be on duty, whether at the employer’s premises or a prescribed workplace; and (b) all time during which an employee is permitted to work, whether or not he is actually required to do so.² The definition of “hours worked” makes no reference to employee productivity, meaning that “hours worked” might even include time when an employee is inactive or does not engage in work productive to the employer.³

ON DUTY, OFF DUTY, AND ON-CALL

An employee is entitled to compensation when he is “on duty.” Unfortunately, “on duty” can be rather difficult to define, since an employee can be inactive but still be considered “on duty.” Under the FLSA, an employee remains “on duty,” despite inactivity, when periods of inactivity are unpredictable or of short duration.⁴ This is because the employee is unable to use the time effectively for his own purposes.⁵ A clear example is a truck driver who has to wait at or near the job site for goods to be loaded onto his truck.⁶ Under the FLSA, the truck driver is working during the loading period and must be compensated accordingly.⁷

Conversely, no compensation is due to an employee for hours during which he is “off duty.” An employee is “off duty” when he is told that he may leave the job and will not have to recommence work until a specified time.⁸ Additionally, any “off duty” time must be long enough so that the employee may use it effectively for his own purposes.⁹ In contrast to an employee who is “on duty,” an employee who is “off duty” has control over his time and may use it as he sees fit. Returning to the truck driver example, if the driver, upon arriving at the job site, is completely and specifically relieved from all duty until a number of hours later in the day and does not otherwise perform work, his idle time is not work time and, therefore, is not compensable under the FLSA.¹⁰

The same principles also apply to “on-call” scenarios. Typically, unless an employee is required to remain on-call on the employer’s premises or within a fixed geographic location, the on-call hours are not compensable for purposes of the FLSA.¹¹ Therefore, a doctor who must remain within a one-mile radius of the hospital that employs him is considered to be working while on-call; the restriction on the doctor’s movements is a significant impingement on his freedom to use and enjoy his time. By contrast, an employee who is not required to remain on the employer’s premises or at a fixed location, but only required to be available should his services be needed, is not working while on-call. Accordingly, a tow-truck operator who is authorized to travel freely within a community and merely required to carry a cellular phone during periods in which he is away from the office is considered to be not working while on-call; carrying a cell phone is a minimal restriction on his freedom.

TRAVEL TIME

The Portal-to-Portal Act¹² limits an employer’s obligation to pay employees for certain pre- and post-work activities, including commuting time. The Act classifies specific employment-related activities as not compensable,¹³ and an employer is not liable under the FLSA for failure to include such hours in an employee’s pay.¹⁴

The primary activity deemed not compensable is the employee’s act of commuting to and from work at the start and end of each workday.¹⁵ An employee’s regular and daily commute is “ordinary home-to-work travel, and is not compensable work time. This is true, whether the employee works at a fixed location or at different job sites.¹⁶ However, when an employee is required to report to a meeting place to receive instructions or to pick up tools and equipment, the travel from the designated meeting place to the job site is part of the day’s work and must be counted as hours worked.¹⁷ Consequently, in the case of a field inspector who reports to a central office every morning to receive his assignments for the workday and returns every evening to report his findings, all travel time logged from the point at which the field inspector leaves the central office in the morning until he returns to that office at night is considered compensable.

Likewise, an employee must be compensated for time spent traveling from the place of performance of one principal employment activity to the place of performance of another principal employment activity.¹⁸ The best example is a repairman who travels from home to job site, and then from job site to job site. All travel time logged from the when he arrives at the first job site to when he leaves the last job site is compensable.

Travel between cities as part of special one-day assignments away from an employee’s home community and not including an overnight stay (discussed below), as well as travel time resulting from emergency work situations during non-work hours, also are compensable work hours. The employee is traveling for the employer’s benefit and at the employer’s request, and, as such, must be paid for his time.¹⁹ So, if an employee must fly from Boston to Philadelphia on a special one-day assignment, compensable time accrues from the moment he arrives at the Boston airport in the morning until the time that he leaves the Boston airport in the evening to return home. Emergency situations are treated much the same way. If an employee has gone home after completing his day’s work and is called out to travel a substantial distance to perform an emergency job for his employer, all time spent on such travel is working time.²⁰

If travel that keeps an employee away from home overnight, travel time is work time when it cuts across the employee’s typical workday.²¹ The employee is deemed to be simply substituting travel for other duties.²² Travel time in such situations is not only hours worked on regular working days during normal working hours, but also during corresponding hours on typical non-working days (usually Saturdays and Sundays).²³ Therefore, when a business consultant with a regular 9-to-5, Monday through Friday work schedule travels out of town between 1 and 3 p.m. on a Saturday, those hours are compensable.

Similarly, when an employee travels outside of his regular working hours at the direction and on the business of his employer outside of their home area, the time traditionally compensable under the FLSA — unless the employee travels by common carrier or otherwise as a passenger and does not perform work during such time.²⁴ For example, a traveling employee whose duties require him to drive from one location to another outside his regular working hours must be compensated for all travel time.²⁵ In contrast, an employee traveling as a passenger in a motor vehicle or a common carrier (i.e. plane, train, bus, boat) need not be paid for travel time, even outside normal working hours, unless he is performing business-related activities while traveling.²⁶ This is because traveling as a passenger allows the employee time to pursue personal interests, a primary factor in finding an activity non-compensable.²⁷

To fully understand the differences between travel during regular working hours and travel during non-working hours, it is important to keep in mind that travel during regular working hours is almost always compensable, whether the employee travels as a passenger or not. In any event, once active travel is complete, and an employee is free to use his time for personal pursuits, such time is no longer considered work time and is therefore not compensable, even if the employee must remain away from home overnight.²⁸

CUSTOM, PRACTICE, POLICY, OR CONTRACT

It is important to recognize that an established company custom, practice, or policy that is more generous than the Portal Act in its definition of compensable travel time can create liability where it might not otherwise exist under the law. This is also the case where there is a contractual (oral or written) arrangement between an employer and an employee that expressly identifies an activity as compensable.²⁹ Therefore, when terms of an employment contract identify a specific type of travel time as compensable or, as a result of a custom, practice, or policy, employees are regularly paid for travel time that otherwise would not be compensable, the exemptions provided by the Portal Act are negated. Under these circumstances, if an employer desires to follow only the Portal Act, the employer should first notify the affected individuals of intended changes in custom, practice, and/or renegotiate any contractual arrangements.

MOTOR CARRIER ACT EXEMPTION (13(b)(1))

All that having been said, there are circumstances that can eliminate obligations to pay not only travel time, but overtime, to certain employees who travel as part of their normal work. Specifically, section 13(b)(1) of the FLSA, commonly known as the Motor Carrier Act (MCA) exemption, eliminates most, if not all, of the FLSA’s overtime requirements. This is true even when an employee’s activities otherwise would be compensable under the Portal Act and, as such, the FLSA. The MCA exemption comes into play when an employee, as part of his employment responsibilities, engages in the use of a motor vehicle within interstate channels or commerce.³⁰ This is because the MCA exemption, which was designed to promote highway safety, exempts any employee subject to the Department of Transportation’s jurisdiction from FLSA overtime compensation requirements.³¹

Whether an employee is subject DOT jurisdiction is a two-part inquiry. First, do the employee’s activities affect the safety of operation of a motor vehicle?³² The answer is yes when an employee, as part of his regular duties, drives a motor vehicle on public highways. Second, is the employer a “motor private carrier?” While this requirement would seem to exclude most businesses other than freight companies, it does not. A “motor private carrier” is defined as (1) a person who transports property, (2) that the person must own or lease, (3) by motor vehicle in interstate commerce.³³ Additionally, transportation of the property must be for sale, lease, rent, or bailment purposes, or to further a commercial enterprise.³⁴ Given this broad definition, the courts and the Department of Labor often have found that employers in industries other than the transportation industry fall within the “motor private carrier” definition.³⁵ An example of an unlikely “motor private carrier” is a computer service company that employs field engineers to service their customers’ computers at off-site locations. Because the field engineers travel to customer sites while transporting the employer’s tools and equipment, the employer satisfies the definition of “motor private carrier”³⁶ As such, the engineers are exempt from the overtime compensation requirements of the FLSA for all hours worked.

However, it must be pointed out that use of the MCA exemption to mitigate overtime exposure for non-transportation-related businesses is a rather aggressive approach to curbing costs with possibly significant employment relations and legal implications. As such, a complete review of the facts and circumstances of each case is strongly recommended prior to implementing such a practice. It also is suggested that an opinion letter be requested from the Department of Labor.

This caveat is even more well-taken following passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA).³⁷ Prior to SAFETEA, the size and weight of the motor vehicle and material transported were not factors in whether an employer qualified as a “motor private carrier.” As such, the MCA exemption potentially applied to a broad range of employees who transported property by motor vehicle. But SAFETEA changed the definition of “motor private carrier” significantly, limiting its application. This change was accomplished by inserting one word — “commercial” – in the definition of “motor private carrier,” making it: (1) a person transporting property, (2) that the person must own or lease, for sale, lease, rent, bailment or to further a commercial enterprise in interstate commerce (3) by commercial motor vehicle.³⁸ A “commercial motor vehicle” is defined as “a self propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property, if the vehicle (A) has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater; (B) is designed or used to transport more than 8 passengers (including the driver) for compensation; (C) is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or (D) is used in transporting material found by the Secretary of Transportation to be hazardous.”³⁹ Gross vehicle weight rating (GVWR) is the maximum loaded weight of a vehicle (the combined weight of the vehicle, fuel, passengers, luggage, tools, equipment, trailer hitch, and any and all other payload). Vehicles with a GVWR greater than 10,000 pounds include medium, heavy and extra-heavy trucks, such as heavy-duty pick-up trucks, delivery vans and dump trucks.

Thanks to SAFETEA, many employees who previously qualified for the MCA exemption by virtue of the property they transported now are subject to FLSA overtime requirements, because the vehicles they use to transport that property are not big enough. As such, the employees must be paid one and one-half (1 ½) times their regular rate for hours worked in excess of 40 in a week, including travel time compensable under the Portal Act. It appears that limiting the application of the MCA exemption was an unintended result of SAFETEA. As such, it is possible that Congress will return the exemption to its former breadth. Until then, employers must reclassify employees who no longer qualify for the exemption and pay overtime under the FLSA.

This information is intended for informational purposes only. Each situation must be considered and evaluated separately, possibly with involvement of legal counsel.

1 [29 U.S.C. § 207 (2006)]
2 29 C.F.R. § 778.223 (2006).
3 Id.
4 29 C.F.R. 785.15 (2006).
5 Id.
6 29 C.F.R. 785.16 (2006).
7 Id.
8 Id.
9 Id.
10 Id.
11 29 C.F.R. 785.17 (2006).
12 [29 U.S.C. § 254(a)(1) (2006)]
13 29 U.S.C. § 254(a)(1) (2006).
14 Id.
15 Id.
16 Id.
17 29 C.F.R. 785.38 (2006).
18 29 C.F.R. § 790.7 (2005).
19 Id.
20 29 C.F.R. 785.36 (2006).
21 29 C.F.R. § 785.39 (2006).
22 Id.
23 29 C.F.R. § 790.7 (2005).
24 Id.
25 Id.
26 29 C.F.R. § 785.39 (2005).
27 29 C.F.R. 785.16 (2006).
28 Id.
29 29 U.S.C. § 254(b)(1).
30 Levinson v. Spector Motor Service, 330 U.S. 649 (1947).
31 29 U.S.C. § 213(b)(1) (2006).
31 Masson v. Ecolab, No. 04-4488, 2005 U.S. Dist. LEXIS 18022 (S.D.N.Y. Aug. 17, 2005).
32 49 U.S.C. §13102(13) (2006).
33 Id.
34 FLSA 2005-27, Op. Dep’t of Labor (Aug. 26, 2005).
35 Friedrich v. U.S. Computer Services, 974 F.2d 409 (3rd Cir. 1992).
37 Safe, Accountable, Flexible, and Efficient Transportation Act: A Legacy for Users (2005).
38 49 U.S.C. §13102(13) (2006).
39 49 U.S.C. §31132(1) (2006)