A Perfect Storm: Smartphones and the Fair Labor …

1 EM PLOY M ENT L AW. A Perfect Storm Smartphones and the fair Labor By Spencer H. Silverglate Standards Act and Craig Salner Advance planning The nine-to-five workday is quickly becoming a relic of and clear policies will the past. Due in large part to the exploding popularity of minimize the risk Smartphones , today's work environment extends beyond of overtime claims the office to the car, the home and anywhere within the by an increasingly reach of a wireless signal. Smartphone models such as BlackBerry, iPhone and nectivity has produced a predictable side effect employees want compensation for connected workforce. Android allow users to surf the Internet, send and receive e-mail and store data. their electronic overtime. fair Labor Standards Act (FLSA) claims Analysts predict that more Americans continue to gain popularity among employ- will use Smartphones than traditional cell ees and their attorneys. Enacted in 1938, phones by the end of 2011.

2 Roger Entner, the FLSA requires employers to pay cov- Smartphones to Overtake Feature Phones ered employees who are not otherwise in by 2011 (Mar. 26, 2010), http://blog. exempt at least the federal minimum wage and overtime pay of times regular pay to-overtake-feature-phones-in-u-s-by-201 1/. for each workweek. 29 207(a). Even With pressure mounting to improve pro- work that an employer does not request is ductivity in the current economic environ- compensable if the employer has actual or ment, employees are increasingly expected constructive knowledge of it. Schneider v. to use smartphone technology to stay con- Landvest Corp., 2006 WL 322590 (D. Col. nected to their jobs on nights, weekends Feb. 9, 2006) ( an employer is obligated and even vacations. One study found that to pay an employee for all hours worked, BlackBerry users lose on average one hour even those in addition to his or her pre- of leisure time to work every day.)

3 Andy scribed schedule, if the employer knows McCue, Users Try to Keep the 'Berry in Bal- or has reason to know that the employee ance, USA Today (July 19, 2007), http:// is working additional hours ); see also 29. ( work not requested but All this con- suffered or permitted is work time ). More- Spencer H. Silverglate is the managing shareholder and cofounder, and Craig Salner is a partner, of Clarke Silverglate, in Miami, Florida. Mr. Silverglate's practice focuses on complex commercial and employ- ment litigation and the defense of catastrophic personal injury claims. He is a past president of the Florida Defense Lawyers Association and serves DRI as publications chair for the Employment Law Committee and as vice chair of the Jury Preservation Task Force. Mr. Salner's practice areas include employment discrimi- nation and commercial litigation. 2011 DRI. All rights reserved. For The Defense June 2011 41. n n EM PLOY M ENT L AW.

4 Over, employees may not relinquish FLSA tive actions under the FLSA has conspired thority to hire or fire employees or substan- rights by contract. McBurnie v. City of to create a Perfect storm that will disturb tially influence the decision to take those Prescott, 2010 WL 5344927 (D. Ariz. Dec. employers. In the current environment, the actions. 29 100(a)(2), (3) & (4). 22, 2010) ( An individual may not relin- onslaught of electronic overtime claims is To qualify for the professional exemp- quish rights under the Act, even by pri- perhaps only a matter of time. A prudent tion, an employee's primary duty must vate agreement between the employer and employer would do well to address the issue require either (1) advanced knowledge employee, because this would nullify the before the storm hits. acquired by the prolonged course of special- purposes of the statute and thwart the leg- ized instruction, or (2) invention, imagi- islative policies it was designed to effectu- FLSA Exemptions nation, originality or talent in a recognized The first question in determining if off-duty filed of artistic or creative endeavor.)

5 29. smartphone use is compensable is whether (2)(i) & (ii). an employee is exempt from FLSA protec- Finally, an employee satisfies the admin- While the rising tide of tion. At first, mobile devices were widely istrative exemption if his or her primary issued to executives, managers and other duty involves (1) office or non- manual FLSA litigation does not employees who would be deemed exempt work that is directly related to the man- under the FLSA. However, with the prolif- agement or general business operation of yet include a significant eration of mobile communication, more the employer, and (2) the exercise of dis- nonexempt employees working for hourly cretion and independent judgment with number of electronic wages have been expected to use mobile respect to matters of significance. 29. devices after hours for work- related tasks. (a)(2) & (3). overtime claims, the flood Importantly, employee job titles will An employer need not pay employ- not determine whether an employee is ees who satisfy any of the white- collar appears to be coming.

6 Exempt under the FLSA, nor will receiv- exemptions for their overtime, electronic ing a salary rather than an hourly wage. 29 or otherwise. By some accounts, as many ate. ). Employees who prevail in litigation as half of corporations incorrectly clas- What Constitutes Work can recover back wages plus interest, liqui- sify their employees as exempt from FLSA Under the FLSA? dated damages, attorneys' fees and costs. overtime requirements. Michelle Conlin, Assuming that an employee is not consid- 29 216(b). Significantly, the FLSA Revenge of the Managers : Many So-Called ered exempt under the FLSA, the next ques- also allows class actions, known under the Supervisors Are Suing for Overtime Pay, tion is whether after-hours smartphone use FLSA as collective actions. Id. Bus. Wk., Mar. 12, 2001, at 61. Conse- constitutes work. While the FLSA does not The number of FLSA cases filed in fed- quently, employees who are called manag- specifically define work, the Supreme eral district courts nationwide rose from ers or executives may, in fact, be neither.

7 Court has defined it as physical or men- 5,210 in 2008 to 6,118 in 2009. Anthony Rather, determining an employee's tal exertion (whether burdensome or not). R. McClure, Number of New FLSA Law- exempt or nonexempt status under the controlled or required by the employer and suits Filed Each Year Continues to Rise, FLSA requires examining his or her salary pursued necessarily for the benefit of the Litigation News (Oct. 14, 2010), http://apps. and duties. While several exemptions exist employer and his business. Tenn. Coal, Iron under the statute, the most common are v. Muscoda Local No. 123, 321 501, stories/101410-rise-in-flsa-employment-a nd- Labor . the so-called white- collar exemptions. 598 (1944). The Court later extended the def- html. Between January 1 and September 30, Specifically, the FLSA's overtime require- inition to off-duty work if it is an integral 2010, over 5,300 FLSA cases were filed ments do not apply to workers employed and indispensable part of the [employee's].

8 A more than 13 percent increase over the in a bona fide executive, administrative, or activities. Steiner v. Mitchell, 350 247, same period in 2009. Id. professional capacity. 29 213(a)(1). 256 (1956). Concerned that this broad defi- While the rising tide of FLSA litigation Employees qualify for these exemptions if nition of work could unduly burden employ- does not yet include a significant number they earn a salary of at least $23,660 annu- ers, the courts and Congress have provided of electronic overtime claims, the flood ally and perform requisite duties as estab- limitations on the FLSA's reach. appears to be coming. Top tier companies lished by Department of Labor (DOL). such as Verizon, T- Mobile and Black & regulations. Johnson v. Big Lots Stores, Inc., De Minimis Doctrine Decker already have been sued for unpaid 561 F. Supp. 2d 567 ( La. 2008); see also The Supreme Court recognized the de mini- overtime related to smartphone use.

9 In one 29 (a). mis doctrine to treat negligible amounts of high- profile FLSA lawsuit, a police sergeant An employee satisfies the executive ex- work as non- compensable under the FLSA. sued the City of Chicago. This is likely only emption if (1) his or her primary duty is to Anderson v. Mt. Clemens Potter Co., 328. the beginning. The combination of reces- manage an enterprise or an enterprise's sub- 680, 692 (1946). Courts consider three sionary market forces, increased demand division, (2) he or she customarily and reg- factors in determining whether work is for worker productivity, the wired Amer- ularly directs the work of two or more other de minimis: (1) the practical administra- ican workforce and ready access to collec- employees, and (3) he or she has the au- tive difficulty of recording the additional 42 For The Defense June 2011. n n time; (2) the aggregate amount of com- FLSA still may be entitled to overtime com- position that the court could not deem the pensable time; and (3) the regularity of the pensation under state laws.

10 Accordingly, an account managers similarly situated for additional work. Lindow v. United States, attempt to develop policies and procedures purposes of a collective action. Verizon has 738 1057, 1062 (9th Cir. 1984). While to ensure wage and hour compliance should a partial summary judgment motion pend- no bright-line rule exists, work taking less include an analysis of state laws. ing before the district court. than 10 minutes is generally considered In Agui v. T- Mobile USA Inc., ( de minimis. Id. To avoid this exception, Smartphone and Remote Log-In Cases July 10, 2009), former T- Mobile sales rep- FLSA plaintiffs will seek to aggregate their Employees have pursued a handful of law- resentatives claimed, among other things, e-mails, text messages and other commu- suits involving off-the-clock use of smart- that the company provided BlackBerrys or nications with a company, which individ- phones. Many of them are still pending.