Appeals Court Sides with Employees' Pre-Shift Wage Claims

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On Oct. 8, 2021, the United States Court of Appeals for the 10th Circuit, which includes Oklahoma, rendered a decision that could have particular relevance in an era of increased telecommuting and remote work. In Peterson v. Nelnet Diversified Solutions, more than 300 call-center representatives who serviced student loans sued their employer for violating the Fair Labor Standards Act (FLSA) by failing to pay them for time spent booting up their computers and launching software before clocking in. The trial court found that the activities were compensable because they were integral and indispensable to the employees’ principal work activities, which included interacting with borrowers by telephone and email. But the trial court granted summary judgment to Nelnet because, in its view, the amount of time spent in booting up the computers and launching software and the value of the employees’ claims were de minimis, excusing Nelnet from paying the employees for such time.

On appeal, the 10th Circuit agreed with the trial court’s ruling that the pre-shift activities were compensable under the FLSA. The circuit court noted a “clear connection” between the computers and software programs and the work the employees were hired to perform. The circuit court also noted that the data and tools necessary for the employees to do their jobs existed on the company’s computer system.

The 10th Circuit then reversed the trial court’s determination that the de minimis doctrine excused Nelnet from paying the employees for the pre-shift activities and directed the trial court to grant summary judgment in favor of the employees. In doing so, the court applied its customary balancing test to determine whether work time is de minimis: (1) the practical administrative difficulty of recording the additional time, (2) the size of the employees’ claim in the aggregate and (3) whether the employees performed the work on a regular basis. The court found that Nelnet failed to establish it could not estimate the additional time devoted to the pre-shift activities. The court also found that the size of the employees’ claims was not so small that they could be considered de minimis, even though the pre-shift activities took less than three minutes and the total of all the employees’ claims was less than $32,000. Lastly, the court found that the employees were required to perform the pre-shift tasks before beginning each workday, satisfying the regularity requirement.

It is important to note that the employees in Nelnet did not work remotely, and the 10th Circuit did not speculate on whether its decision would have any applicability to remote workers. Nevertheless, the court’s decision is a cautionary tale for employers who allow or require employees to work remotely and for those who require workers to perform certain pre-shift tasks before clocking in. If those tasks are integral and indispensable to the employees’ principal work activities, they will likely be compensable. And if the employer can estimate the amount of time devoted to such tasks without a heavy administrative burden, the aggregate amount of the employees’ claims is not very small. If the pre-shift activities are performed regularly, the employer may have difficulty prevailing with a defense under the de minimis doctrine.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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