Federal District Court Ruling Delivers Victory for Employers in Remote Work Compensation Case

Late last week, the U.S. District Court for the Southern District of Ohio found that under the Fair Labor Standards Act (FLSA), remote call center employees’ workday starts not when they turn on their computers but when they begin using job-related applications. This decision distinguished remote and in-person work environments and challenged interpretations by other circuit courts evaluating the same question regarding physical work settings.

With remote work becoming widespread in recent years, this decision could impact the time employers must pay for a large portion of their workforce and potentially could result in a decision from the U.S. Supreme Court clarifying the question.

When Does the Workday Begin for Remote Employees

Under the FLSA, work is compensable when it is integral and indispensable to an employee’s principal job duties, meaning it is essential to the performance of the work they are employed to do.  Applying this rule, previous rulings from the Ninth and Tenth Circuits  found that the entire boot-up process was both integral and indispensable to the job of in-person call center workers, making it compensable. These courts emphasized that getting the technology up and running was essential for employees to perform their duties in a physical call center.

However, Judge Douglas R. Cole’s ruling in the Ohio district court introduced a different perspective for remote work environments.

In Lott v. Recker Consulting LLC, more than 130 call center workers claimed that they weren’t paid for the minutes spent booting up their computers, authenticating credentials, and shutting down their computers for the day. They filed suit claiming that their employer violated the FLSA in not paying them for this preliminary and postliminary time. When the employer moved for summary judgment, the court agreed.

Judge Cole found that merely turning on a computer is indispensable but not integral to remote work because it opens up a range of potential activities, not all of which are work-related. He reasoned that remote work environments stand in contrast to in-person settings; namely, remote employees often use their own devices and use computers for other tasks besides work.

Within its decision, the court noted that the Ninth and Tenth Circuit rulings were limited to physical work environments and no court had yet decided the issue for remote workers. Still, Judge Cole questioned the holdings of the Ninth and Tenth Circuit court decisions, calling out “missteps” in their analysis and potentially setting the stage for further application beyond remote work.

Uncertainty Remains Ahead for Employers

While the Ohio court ruling offers a favorable framework for employers on remote work compensation, it stands as a single decision amidst other legal challenges. With an appeal likely on the horizon, the case presents a valuable opportunity for the Sixth Circuit to provide further guidance on the matter. Should the Sixth Circuit’s interpretation differ from those of the Ninth and Tenth Circuits, it may also pave the way for the U.S. Supreme Court to step in and clarify the issue.

Key Employer Takeaways

With likely legal challenges ahead and a potentially changing landscape for remote workers, employers must carefully assess pay policies to ensure compliance and fair compensation for employees.

Employers should:

• Evaluate which tasks are integral and indispensable to the productive work the employee is employed to perform to determine employee start and end times.
• Clearly define the workday start and end within company policies and procedures.
• Ensure that supervisor instructions and policies closely align.

Employers must also stay informed and be prepared for further legal developments to adjust practices accordingly.

If you have questions or need advice or guidance, please contact Sarah Smith-Clevenger or any member of the Phelps Labor and Employment team.