Pay for Commuting and Off-the-Clock Work

As employers rely increasingly on technology to connect and communicate with their employees, work may more easily be performed “off-the-clock” before or after an employee’s official workday.  Particularly for nonexempt employees paid on an hourly basis, time spent on certain off-the-clock activities may be compensable.  In Rutti v. Lojack Corp., Inc., the  9th Circuit U.S. Court of Appeals held that requiring employees to use a company-owned vehicle does not render their commute time compensable, and also considered when employers must compensate for an employee’s off-the-clock activities.

Mike Rutti was employed by Lojack as a technician to install and repair alarms in customer cars.  Most, if not all, of the installation and repair work was done at the clients’ locations.  Rutti was responsible for clients in Orange County, which required him to commute and travel to job sites in a company-owned vehicle.
 
Lojack required technicians to log on to a hand-held computer device provided by Lojack every workday morning to receive the day’s assignments.  Rutti also spent time mapping his routes to the assignments and prioritizing his jobs for the day.
 
During the day, Rutti recorded information about the jobs he performed on a portable data terminal provided by Lojack.  After he returned home in the evening, Rutti was required to upload data of his work to the company by connecting the portable data terminal to a modem provided by Lojack.  Rutti was required to make sure the upload transmission was successful.  This often took more than one attempt.
 
Rutti was paid on an hourly basis, beginning when he arrived at his first job location and ending when he completed his final job of the day.  Rutti was not paid for time spent commuting from home to his first job site of the day, or for returning home from his last job site.  Rutti was also not paid for “off-the-clock” activities performed before leaving for work in the morning and after returning home.
 
Rutti filed a federal class action lawsuit against Lojack on behalf of himself and other Lojack technicians, claiming that Lojack had failed to compensate the employees for time commuting and performing “off-the-clock” activities before and after work.  He alleged violations of the U.S. Fair Labor Standards Act  and the California Labor Code.  Lojack moved for summary judgment, which the trial court partially granted.  Rutti appealed.
 
Rutti argued that, because he was required to commute in Lojack’s vehicle, and because of Lojack’s restrictions on use of the vehicle, he did not voluntarily agree to the arrangement.  Therefore, he argued, he was entitled to compensation for his commute time.  Lojack’s restrictions required that Rutti not use the vehicle for personal pursuits or transporting passengers, that he drive directly from home to work and from work to home, and that he have his cell phone on during the workday.
 
Despite these restrictions, the Court of Appeals concluded that the arrangement was permissible under the federal Employee Commuting Flexibility Act which expressly allows employers and employees to agree that the employee’s commute is not part of his or her principal activities and therefore is not compensable.
 
Under the Employee Commuting Flexibility Act, an employer need not compensate an employee for commuting “to and from the actual place of performance of the principal activity or activities which such employee is employed to perform.”  It further explains that the “use of an employer’s vehicle for travel by an employee and activities performed by an employee which are incidental to the use of such vehicle for commuting shall not be considered part of the employee’s principal activities if … the use of the employer’s vehicle is subject to an agreement on the part of the employer and the employee.”  The 9th Circuit found that there is no suggestion under the Employee Commuting Flexibility Act that “an agreement on the part of the employer and the employee” cannot be a condition of employment.  
 
Rutti’s commute time was also not compensable under California law.  California Labor Code Section 510(b) provides that “[t]ime spent commuting to and from the first place at which an employee’s presence is required by the employer shall not be considered to be a part of a day’s work, when the employee commutes in a vehicle that is owned, leased, or subsidized by the employer and is used for the purpose of ridesharing.”
 
The Employee Commuting Flexibility Act, in addition to exempting commute time from compensation, also provides that an employer need not compensate its employees for “activities which are preliminary to or postliminary” to an employee’s principal activities.  “Preliminary” refers to off-the-clock activities performed before clocking in, and “postliminary” refers to activities after an employee clocks out for the day.
 
Also, under the Fair Labor Standards Act, an otherwise compensable activity where time spent is de minimis is not compensable due to the practical administrative difficulty in recording small amounts of time.  Determining whether compensable time is de minimus involves consideration of three factors: the practical administrative difficulty of recording the additional time; the aggregate amount of compensable time; and the regularity of the additional work.
 
To be compensable, off-the-clock activities must be related to an employee’s “principal activities” and time spent on the activity must be more than de minimus.  
 
Rutti’s preliminary activities involved receiving, mapping, and prioritizing jobs and routes for assignment before leaving for his first assignment of the day.  These activities were related to his commute, which was already found noncompensable and distinct from Rutti’s principal activities.  Even where they related to principal activities, the evidence showed that they were de minimus and did “not take more than a minute or so” each morning.
 
Although Rutti’s preliminary activities were not compensable, the 9th Circuit held that his postliminary activities may be compensable.  Rutti’s postliminary activities required that he send a portable data terminal transmission to Lojack after returning home from his last job of the day.  The 9th Circuit held that these activities related to Rutti’s principal job as a Lojack technician because the transmissions were made every day to provide Lojack with information concerning all the jobs its technicians perform during the day.  These transmissions were part of the regular work of the technicians in the ordinary and necessary course of Lojack’s business, and were performed by the technicians primarily for the benefit of the employer.
 
While finding Rutti’s postliminary activities were related to principal activities, the9th Circuit declined to decide whether the activities were de minimus.  Since there were material issues of fact as to whether the transmissions were de minimus, the 9th Circuit vacated the trial court’s grant of summary judgment on the claim for the transmissions and remanded the case to the trial court for further findings.  

The Lojack case reaffirms the general principle that an employee’s time spent commuting to and from work is not compensable under both federal and California law.  However, the case also clarifies when off-the-clock work may become compensable time.  Although commuting time is generally not compensable, an employee who works during his commute from home to work may be performing a “preliminary activity related to a principal activity.”  In that case, the preliminary activity must be compensated, provided the time spent is not de minimus.  In light of this case, employers should continually caution their hourly-paid employees to avoid performing any “off-the-clock” work without prior employer authorization.