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Overtime Pay in the Smartphone Era

iPhoneThe Fair Labor Standards Act exempts employees employed in an executive, administrative, or professional capacity from the minimum wage and overtime pay provisions. To be covered by one of these exemptions, an employee must perform specified duties, and be paid a salary in excess of a specified amount.

The ways that overtime pay may be determined is important for all businesses to note. This includes the ways in which nonexempt staff members are asked to use personal electronic devices to remain accessible outside of office hours. A federal court case in Illinois demonstrates why.

The court refused to dismiss a lawsuit claiming that the City of Chicago violated the Fair Labor Standards Act by failing to pay police officers overtime pay for the use of smartphones for work-related business during nonworking hours.

A Chicago police sergeant (the “plaintiff”) sued the City of Chicago on behalf of himself and all other employees of the Chicago Police Department against the City of Chicago, alleging that the City violated the Fair Labor Standards Act (“FLSA”) by failing to pay plaintiffs all the compensation they were due.

The plaintiff claimed that, at various points in the last three years, he and other employees of the police department were issued personal data assistants (“PDAs”) or other electronic communication devices. He further alleged that:

  • he and other employees were “required to use” those devices to perform work outside of normal working hours without receiving compensation—including overtime compensation;
  • police work was “routinely and regularly accomplished through the use of these PDAs”;
  • without these PDAs and the work routinely performed while off-duty, the police department would be far less successful in accomplishing its law enforcement objectives;
  • he received numerous telephone calls, e-mails, voice mails, and text message work orders on his PDA while off the clock, and was expected to respond to these communications throughout the night and into the early morning hours while off duty without being compensated for the time he spent doing so;
  • he and other employees were not paid overtime for the excess hours they worked during off-duty hours using their PDAs; and
  • the city did not keep appropriate records as required by the FLSA to determine wages, hours, and other conditions and practices of employment.

The plaintiff sought monetary damages in the form of overtime compensation equal to the unpaid compensation and overtime compensation due all police department employees, plus interest, and reasonable attorney’s fees, costs, and expenses.

The city asked the court to dismiss the lawsuit for failure to state a claim upon which relief could be granted. The court declined to do so, noting that the plaintiff’s claim had sufficient merit to proceed to trial. The court acknowledged that “de minimis” (i.e., minimal) compensable time is “not recoverable under the FLSA.” It referred to a federal regulation that states: “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.” 29 C.F.R. § 785.47.

This rule applies to “uncertain and indefinite periods of time involving a few seconds or minutes duration.”

The city also argued that plaintiff failed to allege the amount of time he spent off duty, beyond a de minimis amount, responding to PDA communications that required his immediate response. The court responded: “Whether the amount of time plaintiff worked off the clock is greater than a de minimis amount, however, is a matter of the proof of his claim, not a matter of the sufficiency and plausibility of his complaint. We are mindful that some courts have required more detailed allegations as to the type and amount of work that allegedly earned FLSA overtime compensation …. [But] the elements that must be shown are simply a failure to pay overtime compensation … and failure to keep payroll records in accordance with the Act.”

The court concluded:

The plaintiff pleaded that he was entitled to overtime pay because he “routinely and regularly” responded to phone calls, e-mails and work orders off the clock, as expected by the police department. He further has alleged that he was not paid for the excess hours worked, and that the city failed to keep appropriate records. These allegations of FLSA violations are plausible, and they give the city adequate notice of the claim. Whether plaintiff can prove what he has plead remains to be seen after discovery.

What this means for your business: This is the first case that we have seen to address employer liability for overtime based on employees’ use of cell phones during non-working hours for business purposes. This court suggested that liability may arise, so long as the cell phone use is documentable and not “de minimis.” The case now proceeds to trial, unless it is settled. For now, business owners should consider some obvious steps to reduce this potential risk of an overtime pay liability:

  1. Only issue cell phones to employees who clearly satisfy the definition of “exempt employees” under the FLSA. Exempt employees include administrative, executive, and professional employees.
  2. If you currently issue cell phones to non-exempt employees, review each case to determine if there is a legitimate business need to do so.
  3. If you determine that a legitimate business need exists for issuing cell phones to one or more non-exempt employees, then require these employees to keep accurate records of their business use of the device that should be cross-checked against the monthly cell phone bills for confirmation. The employer has a duty under the FLSA to maintain these records. Obviously, this is going to be an administrative burden that may prompt a reconsideration of which employees really need a business-provided cell phone.
  4. If you determine that a legitimate business need exists for issuing cell phones to one or more non-exempt employees, then consider a policy that requires these employees to leave their business-provided cell phones in their office during non-working hours. Allen v. City of Chicago, 2011 WL 941383 (N.D. Ill. 2011).

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