FLSA De Minimis Rule, by HR WatchDog

On July 10, 2024, the U.S. Ninth Circuit Court of Appeals revisited a timekeeping case centered around a dispute over whether an employee “booting up” a computer to access the time clocks should be compensated as hours worked. This case focused on whether the de minimis rule — that excuses employers from paying for small, irregular or difficult to capture work time — still applies. In their recent opinion, the Ninth Circuit preserves the de minimis rule for Federal Labor Standards Act (FLSA) overtime purposes (Cadena v. Customer Connexx LLC, No. 23-15820 (9th Cir. July 10, 2024)).

As previously reported, the Ninth Circuit’s first review of this case centered around whether booting up a computer was an integral part of job duties that should be compensated. Customer Connexx operates a call center in Las Vegas, Nevada where Cariene Cadena and Andrew Gonzalez worked to provide customer service and scheduling for an appliance recycling business. Employees were required to clock-in on timekeeping software that could only be accessed on a functioning computer before beginning other computer-required duties. Call center workers are not assigned workstations — each workstation is first come, first served. Computers at each workstation booted up with varying speeds — some “old and slow” and others that were too slow as to be unworkable requiring employees to try multiple workstations.Cadena and Gonzalez brought a class action lawsuit under the FLSA and Nevada law against Customer Connexx alleging that they and other similarly situated employees should be compensated for time spent waiting for the computer to boot up and launch the timekeeping system allowing them to clock in. The trial court initially ruled in favor of Customer Connexx because booting up computers and launching timekeeping systems were not employees’ principal job duties — answering customer service calls and scheduling were — and that booting up a computer was not integral nor indispensable for that task. Cadena and Gonzalez appealed. On the first appeal, the Ninth Circuit disagreed with the trial court and revived the lawsuit for the plaintiffs.

When the case returned to the trial court, the court again dismissed the class action in favor of Customer Connexx, this time holding that booting up computers — even if compensable as an integral job duty — is a de minimis activity that Customer Connexx is not liable to pay for. Cadena and Gonzalez appealed again, this time arguing that the de minimis rule — which is not codified in the FLSA — is not valid after the U.S. Supreme Court previously said it was not valid in the context of donning and doffing work clothing or equipment.
In 1947, the U.S. Supreme Court established the de minimis rule when it held that the FLSA generally is not concerned with “trifles” and that when the matter involves only a few seconds or minutes of work beyond the scheduled working hours, that minimal amount of time doesn’t need to be compensated. The Ninth Circuit has a long-established, three-factor balancing test for determining whether time worked falls within de minimis standards:

• The regularity of the unrecorded additional work;
• The aggregate amount of compensable time; and
• The practical administrative difficulty recording the time.

Cadena and Gonzalez now argued that this rule is invalid generally, not just in the work clothing and equipment context. The Ninth Circuit disagreed, holding that because donning and doffing is a different FLSA section than the overtime provisions at issue here, no court precedent has definitively held the de minimis rule to be invalid generally under the FLSA. Therefore, based on long-standing U.S. Supreme Court and Ninth Circuit case law, the Ninth Circuit preserved the de minimis rule.

While preserving the de minimis rule in the context of overtime and hours worked, the Ninth Circuit also sent this case back to the trial court as it found a factual dispute with the three-factor test. Is the fact that all workers regularly perform these duties every shift make it so regular as to negate the de minimis rule? Further, is there really a practical administrative difficulty recording the time? Could Customer Connexx require a different method for timekeeping that will adequately record the time that workers spend booting up and logging off the computers? These are questions of fact for the trial court, but this provides a roadmap for employers to consider whether their current timekeeping methods are aligning with wage-and-hour laws requiring payment for all hours worked.

Of course, this case involves a federal wage-and-hour standard, and we know in California that the rules are much stricter. Over the past several years, the California Supreme Court has, practically speaking, eliminated the de minimis rule from California law requiring payment for all hours worked no matter how small the amounts are. Timekeeping also remains a hot topic as the California Supreme Court is currently considering whether employees may utilize neutral rounding practices for timekeeping in light of current technology and recent case law requiring payment for all hours worked.

Finally, thanks to the recently enacted Private Attorneys General Act reform, all California employers have a prime opportunity to take the lessons from this case as well as other recent wage-and-hour cases plus take reasonable steps to come into compliance with wage-and-hour laws, including conducting a wage-and-hour audit and devising proper policies related to timekeeping and other wage-and-hour issues.

Blog by : Matthew J. Roberts, Associate General Counsel, Labor and Employment