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Logging into computer or phone system at start and end of work shifts may actually be compensable for affected employees

July 30th, 2013  |  Ron Miller

The modern workplace provides employees with vastly different tools than in the past. Employees can literally be connected in real time to almost any place on earth. However, many business models require a level of customer support. What does that support cost? In a recent case, customer service representatives for an insurer pointed out some of those potentially forgotten costs in a very expensive lesson.

The customer service representatives (CSRs), who worked at Farmers Insurance Group call centers in California, Oregon, Kansas, Texas, and Michigan, were granted certification of several Rule 23 classes and conditionally certified an FLSA collective action in a wage suit alleging they were required to perform off-the-clock work. According to the complaint in Ribot v Farmers Insurance Group, the CSRs had to arrive 15 minutes before their scheduled shift each day so they could boot up their computers, load programs, log on to the phone system, check email, and perform other essential work duties.

In this instance, the call center employees alleged their insurance company employer failed to pay them for pre-shift time they had to spend ramping up for duty. They were able to show that putative class members were all subjected to common policies requiring pre-shift work — citing express directives from supervisors along with evidence of the great weight placed on “schedule adherence” — resulting in uncompensated work time.

Corrective notice. But the employer’s problems didn’t begin there. After a DOL investigation uncovered “significant and systemic” FLSA violations, Farmers in March 2011 agreed to pay more than $1.5 million in overtime back wages to 3,459 employees pursuant to a settlement agreement. The plaintiffs in the instant case filed their complaint that same month, but they did not learn of the DOL enforcement action until the agency issued a press release in July 2011. Shortly thereafter, they filed an amended complaint excluding the time period and facilities covered by the DOL settlement.

The CSRs also sought a corrective notice for those employees who accepted settlement checks, along with leave to file another amended complaint to amend the class definitions to include those who accepted the settlement payment but might not have validly waived their claims. At issue was whether those individuals “agreed” to the settlement.

In this case, the WH-58 form signed by the employees contained a clear statement that employees who accepted the payment gave up their rights to bring suit “for the payment of such unpaid minimum wages or unpaid overtime compensation for the period of time indicated above.” Thus, the employees who signed WH-58 forms were made aware that they would not be able to file or join a lawsuit concerning the same unpaid wages that they recovered in the settlement, the court reasoned.

Policy of pre-shift work. Turning to the merits of the CSRs’ claims, the court found that they presented substantial deposition testimony, from witnesses at multiple facilities, indicating that they were instructed to be ready to work by the time their shift started. Supervisors implied or explicitly stated that employees needed to arrive early to perform preliminary tasks. Moreover, Farmers’ “schedule adherence” policy loomed large. Schedule adherence was a key metric in employee performance evaluations, and it was part of the employer’s policy to require pre-shift work.

Class claims. Notwithstanding the fact that the named plaintiffs were not employed at all the branch facilities from which the putative class would be drawn, they presented sufficient evidence that the challenged policies at issue were in effect at all the employer’s call centers and appeared to be governed by company-wide policies. As to Farmers’ contention that the class would be unmanageable because there were claims asserted under the laws of five different states, the court noted that the CSRs were not seeking to certify a nationwide class, but rather five subclasses, each comprised of employees of one state. Moreover, the fundamental issue — whether the company had a policy of requiring pre-shift work — would not depend on various state laws to determine liability.

Having found that the CSRs’ state law claims regarding pre-shift work met the requirements of Rule 23, and that the underlying factual and legal questions were identical with respect to their federal claims, the court next determined that the FLSA class was similarly suitable for conditional certification.

Integral work activities. Of course, increased efficiency and productivity are laudable goals of employers, and as technology advances more tools are likely to become available on the desktop and at an employee’s fingertips. Still, employers must consider the impact their work policies have on the compensable time of their employees. Specifically, employers must be cognizant of whether pre- or post-shift activities are necessary to the performance of employees’ duties, and whether they primarily benefit the employer, such that the activity was integral and indispensable and defined the outer parameter of the workday. Under such circumstances, the pre- and post-shift activity would be compensable as asserted by these call center employees.

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