If there was any doubt that off-the-clock issues are vexing and perplexing, especially for California employers, consider this: A distinguished three-judge panel of the 9th U.S. Circuit Court of Appeals has withdrawn the opinion it issued less than six months ago in the much-discussed Rutti v. Lojack Corporation case and has issued a replacement decision.

This advisory updates our September 2009 advisory, “Commuting in a Company Vehicle, Home E-Mail Activity: Compensable Employee Time?” in which we reported on the 9th Circuit’s original Rutti decision.1

In Rutti II, there are three separate opinions because all three judges could not agree on the resolution of two of the key issues: whether time spent commuting in a company vehicle, and whether time spent at home entering data into the company’s computer, are or are not compensable activities.2

Background

Federal and most state wage-and-hour laws, California included, require that employees be paid for all "hours worked.” 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.” 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.4 The court established a three-pronged test to determine de minimis: (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

California regulations are different, defining “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.” 7 Ten years ago, in Morillion v. Royal Packing Co., the California Supreme Court interpreted the “subject to control” test to include the time workers spent traveling from a pick-up place to the worksite in the company bus they were required to use because they “could not drop off their children at school, stop for breakfast before work, or run other errands requiring the use of a car.” 8 Since Morillion, California employers have struggled to understand the limits of the “subject to control” test.

Rutti lawsuit

Mike Rutti worked out of his home in California, driving a company vehicle to customer sites to install and repair vehicle recovery systems. 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

In Rutti I, the 9th Circuit held that Rutti’s commute time was not compensable under either federal or California law. In Rutti II, all three judges continue to find it not compensable under federal law, but two of the judges now conclude that it is compensable under California law. Under the federal law analysis, the time Rutti spent driving was deemed “incidental” to his employment rather than being a “principal activity” and, thus, not “hours worked.” 9

Revisiting California law and applying the Morillion decision, however, the Rutti II majority concluded that the commute time was “subject to the employer’s control” making it compensable under state law because Rutti was required to use the company vehicle to commute to and from customer sites and was not permitted to make personal stops or to engage in any other personal activity while so doing. The third judge interpreted Morillion differently. Pointing out that Rutti was free to determine when he left home and what route to take, she concluded that Rutti’s commuting time was not work time under California law.

Computer activity from home 10

The Rutti II judges next re-examined Rutti’s before-work activities: checking the computer for his daily assignments and then mapping his route. All three continued to agree that these were not “principal activities” and therefore not compensable as work time under federal law and that, even if they were, the time was de minimis under the Lindow test because the activities took only a minute or so.

Rutti’s after-work activities were, once again, a different story. 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. All three judges agreed that this activity was an “integral and indispensable part” of Rutti’s job and, therefore, would be compensable time under federal law unless it was de minimis—and on that point, they continued to disagree.

Applying the Lindow test, two of the three judges decided that the after-work time was not so clearly de minimis as to warrant rejection of Rutti’s claim. These judges found that although the first prong of Lindow, “the practical administrative difficulty of recording the additional time … [was] closely balanced” between Rutti’s position and the company’s position, the other two prongs “the aggregate amount of compensable time, and the regularity of the additional work,” favored Rutti. Rutti’s claim was sent back to the trial court for further evidence on the issue. The third judge vigorously disagreed, concluding that the time was de minimis under any analysis.

Lessons Rutti II teaches

  • One: State law, if more favorable to the employee, can override federal law. Even if something is permitted, or is not compensable, under the Fair Labor Standards Act or some other federal wage-and-hour law, the result may be different under state law—and often is in California.
  • Two: Even though a California employer correctly follows federal law, the employer probably must pay employees who work from their homes for the time they spend traveling to their first worksite of the day and from their last worksite of the day if it requires the employees to use a company car and if the employer significantly restricts the employees’ activities during that time.
  • Three: California employers probably do not have to pay employees for their time spent briefly 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.
  • Four: California employers 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 on how difficult it would be to track it.