By Brian D. Bertossa, Esq., Cook Brown, LLP, for the California Employers Association June Newsletter
In a decision filed March 2, 2010, the federal Ninth Circuit Court of
Appeals in Rutti v. Lojack Corp. reversed its own prior decision in the same case and held that an employee required by his employer to travel to and from work in a company vehicle was entitled to compensation under California law for his commute time where the employee was under the control of the employer during the commute. The decision provides further guidance in determining what activities meet the definition of "worktime" for which compensation must be paid.
Facts: Mike Rutti was a technician who installed theft deterrent systems for Lojack, Inc. He primarily performed installations at the customers’ locations. Lojack required Rutti to travel in a company vehicle to perform installations at customer sites. Lojack placed a number of restrictions upon Rutti during his commute, among them: Rutti could not stop for personal errands, could not have passengers, was required to drive the vehicle directly from home to his job and home again, could not use his cell phone while driving the company vehicle, and was required to keep his cell phone on to answer calls from the company dispatcher.
Rutti sued Lojack on behalf of himself and all technicians, seeking compensation for his commute time and also for time spent performing "preliminary" activities such as receiving, mapping, and prioritizing jobs and routes for assignment before leaving home for his first job of the day and the "postliminary" activity of recording information about the installations performed that day on a portable data terminal provided by Lojack after returning home.
Commute Time Found Compensable under California Law. The court found that Rutti’s time spent commuting in a company vehicle was not compensable under federal law. The court relied upon language in the Employee Commuting Flexibility Act (ECFA) which provides that, where use of a company vehicle is subject to an agreement on the part of the employer and the employee, it is not part of the employee’s principal activities and thus not compensable. The court rejected Rutti’s claim that the restrictions placed by the employer on his use of the company vehicle transformed commute time into compensable time under ECFA.
The court initially concluded that the commute time was also not compensable under California law. However, following rehearing,
the court reversed its previous ruling and found Rutti’s commute time compensable under Morillion v. Royal Packing Company, a California Supreme Court case which held that employees must be compensated during time when an employee is subject to the control of an employer.
In Morillion, the plaintiffs were required to ride a company bus to and from their work. The California Supreme Court, in finding such time compensable, found that the plaintiffs were subject to the control of their employer during this commute because they could not perform personal errands during that time. The Rutti court stated as follows: "There is simply no denying that Rutti was under Lojack’s control while driving the Lojack vehicle en route to the first Lojack job of the day and his on way home at the end of the day."
The court concluded: "Because he was obviously under the employer’s control in these circumstances he was, under California law, entitled to be paid."
Preliminary and Postliminary Activities. Having disposed of the commute time issue, the court next turned its attention to whether Rutti was entitled to compensation for certain preliminary and postliminary activities. The ECFA provides that an employer need not compensate an employee for activities which are preliminary to or postliminary to the employee’s principal activity. Therefore, the court held, "to be entitled to compensation for his off-the-clock activities, Rutti must show that they are related to his ‘principal activities’ for Lojack." However, even if the activities are related to the employee’s principal activity the time is still not compensable if it is de minimis.
In determining whether an activity is de minimis, the court considered 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.
The court found that Rutti’s preliminary activities undertaken in the morning prior to his commute – receiving, mapping, and prioritizing jobs and routes for assignment - were all related to his commute and not his principal activities and thus not compensable.
However, regarding Rutti’s "postliminary" activity of sending a transmission to his employer on a company-provided modem following his day’s work, the court found that the lower court "could not determine that this activity was not integral to" Rutti’s principal activities.
Conclusion. The lessons to employers from the Rutti decision are: first, that an employee’s commute time in a company vehicle is compensable under California law where the employer exerts control over the employee’s activities during the commute. Second, employers should recognize that the rules regarding when employees must be paid for preliminary and postliminary activities are not precise in nature and therefore employers should be very cautious about requiring employees to perform tasks before and/or after their regular work day for no additional compensation; an employee may argue such tasks are related to their principal activity and not de minimis in nature, and therefore compensation is required. An employer would then face the prospect of either individual or class action litigation seeking to recover compensation for all employees required to perform such tasks.
***
Cook Brown represents employers in labor relations and employment disputes. Their business clients are large and small and include contractors, manufacturers, farms, banks and retailers. Their public sector clients include cities, state agencies and schools. With the firm’s depth of experience in traditional labor law and collective bargaining, as well as employment litigation, Cook Brown is uniquely positioned to meet the challenges confronting today’s employer.
The California Employer’s Association (CAE) has been providing human resource solutions for employers since 1937. Visit their website: http://www.employers.org/