I hear the devil is in the details, but I’m wondering just how mired in minutia our nonprofit needs to get. We operate a few thrift stores in different locations and all our employees record their time on a computerized payroll system. When managers aren’t available to open and close the stores we have our senior sales staff take care of it, but that entails handling certain responsibilities before logging on or after signing off the payroll system. For example, at the end of a shift, they log off, turn off the lights, check and lock doors, and set alarms. Do we have to correct their time cards to reflect this time—up to five to ten minutes at most—as time worked? What about our other staff who have to log into their computers before they can “clock in”?
Dear Minute Man:
The old adage “every minute counts” is the general rule that should be applied by employers. Not only do non-exempt employees understandably expect all time to be compensated, but state and federal wage and hour laws require this as well. Not to mention, as nonprofits our work is in the social justice sphere, and paying people fairly for time worked is critical to practicing what we preach, even when facing tight budgets.
Under the federal Fair Labor Standards Act (FLSA) employees are required to be paid for any time they are “suffered or permitted to work.” The U.S. Department of Labor (DOL) has adopted regulations clarifying that the phrase “suffer and permitted to work” includes such things as waiting time, employee on-call and travel time, training, and even rest periods.
But there are some one-off exceptions to this. FLSA regulation 29 CFR 785.47 discusses the circumstances under which work time is “de minimus,” that is, too small or irregular to be paid:
“In recording working time under the Act, insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded… (as) de minimus… This rule applies only where there are uncertain and indefinite periods of time involved of a few seconds or minutes’ duration, and where the failure to count such time is due to considerations justified by industrial realities. An employer may not arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time or practically ascertainable period of time he is regularly required to spend on duties assigned to him…”
But employers beware: the “de minimus” rule is inherently subject to interpretation—both yours and your employee’s—so there almost always exists a question around whether the rule applies, which can subject you to costly litigation. The same is true for employers who use time card rounding to the nearest tenth or quarter hour, because it is the employer’s burden to prove that all hours worked have been paid such that any rounding does not work to disadvantage employee overtime.
When Every Minute Counts
Some states, most notably California, have their own definition of “time worked” that some consider more employee-friendly. A recent California Supreme Court decision involving “off the clock” time worked at a Starbucks discusses the very employee opening/closing scenario you posed. The employee clocked out of work on a computer, then engaged in store closing activities that took two to ten minutes per shift. Over the 17-month period of his employment, the worker’s unpaid time totaled around 13 hours, or $102.67 in lost wages. Not that much over 17 months, right? The CA Supreme Court thought otherwise.
The court held that the de minimus rule applies only where there are uncertain and indefinite periods of time involving a few seconds or minutes each. The court reasoned that the employee should not bear the burden of difficulty in tracking time, noting that technological advances such as smartphones and tablets can alleviate such challenges, as can using time studies or rounding practices that capture all hours worked over time. And bam! Starbucks now is faced with having to defend against a class action lawsuit over minutes of work: don’t let that happen to your nonprofit.
In some help to employers, the Justices writing concurring opinions provided examples where they thought the de minimus rule applies to preclude liability:
- An employer requires workers to turn on their computers and log in to an application in order to start their shifts. Ordinarily this process takes employees no more than a minute (and often far less, depending on the employee’s typing speed), but on rare and unpredictable occasions a software glitch delays workers’ log-ins for as long as two to three minutes.
- An employer ordinarily distributes work schedules and schedule changes during working hours at the place of employment. But occasionally employees are notified of schedule changes by e-mail or text message during their off hours and are expected to read and acknowledge the messages.
- After their shifts have ended, employees in a retail location sometimes stick around for several minutes waiting for transportation. On occasion, a customer will ask a waiting employee a question, not realizing the employee is off duty.
So while there are infrequent and insignificant periods of time that need not be recorded, it is clear that employers may not arbitrarily fail to count time worked, however small, of the employee’s regular schedule or any period of time regularly required to complete assigned duties.
To mitigate risk of an off the clock wage claim, your nonprofit should:
- Perform time studies of any opening or closing procedures performed by non-exempt employees. Include that time as hours worked.
- Adopt a policy like the sample below that requires non-exempt employees to report in writing to the supervisor any unanticipated work performed after clocking in and out of computerized time systems. Train supervisors to correct timecards to reflect any additional hours worked.
Corrections to Timecard Entries for Non-Exempt Employees
Your timecard should reflect the actual time required to perform all regularly scheduled work. Employees are expected to obtain written supervisor approval to work any time outside their regular schedule. If you are regularly required to perform work either before or after completing your computerized timecard entry, please immediately report that in writing to your supervisor so that your time card can be corrected and a method can be established to include that time on your timecard. Similarly, if an unusual circumstance arises where you perform more than a minute or two of work before/after clocking in/out of work, please notify your supervisor in writing so that a correction can be made to your timecard.
Hope this helps and here’s to making those minutes count!
Ellen Aldridge is an Employment Risk Manager for Nonprofits Insurance Alliance Group. Ellen has practiced labor and employment law for over 30 years as a litigator, negotiator, and adviser. Now in her 11th year with the Group, Ellen brings her experience to assist nonprofits in managing employment law risks and implementing best practices to motivate and support employees. Ellen received her B.A. in Government from University of San Francisco and her J.D. from Santa Clara University. On the weekend, you can find her on the tennis courts or in her garden.