Employer’s control over time not worked cost company over $54 million

Posted January 27, 2020

In a January 6, 2020 class action opinion, the 9th Circuit Court of Appeals held that an employer must pay drivers $54,604,181 for violating California meal and rest break laws. The drivers claimed that they were not receiving adequate minimum wage pay. The company paid truckers through what it called an activity-based pay system. That system included pay for the following:

• Mileage,
• Tasks that constituted “activity,” such as arriving and departing a facility, as well as hooking a new trailer to the truck, and
• Hourly wages of fourteen dollars per hour for limited events like time spent waiting at a store or supplier, delays due to inclement weather, or delays caused by a truck breakdown.

The company did not, however, pay drivers for time spent during layovers, rest breaks, and inspections — in violation of California law, according to the drivers.

Under California law, time drivers spent on layovers and so forth, is compensable if the employer exercises control over the drivers during those breaks. The Court held that a comprehensive review of the employer’s pay manual demonstrated that it unambiguously required drivers to obtain preapproval to take a layover at home, and therefore, if applied as written, resulted in the employer exercising control over employees during mandated layovers.

The employer argued that workers need not be compensated for time spent on legally mandated breaks. It said that surely the law cannot require a driver to be compensated for periods when state and federal law compel drivers not to work.

The 9th Circuit indicated that this argument does not follow California law. In California, an employer must pay minimum wages whenever it controls the employee, whether the employee is actively working or not. The court felt there was sufficient evidence for the jury to find that the employer in this case had exercised control over its drivers.

The mere fact that the employer required its drivers to take layovers — as required by law — did not indicate that the employer exercised control over drivers during breaks. Rather, the relevant consideration is the level of control that the employer exerted over its employees during layovers. The employer required drivers to gain preapproval from management before taking a layover at home. It also required drivers to record the break at home and the approving manager on the trip sheet. Finally, drivers could be subject to disciplinary action, up to and including immediate termination for taking an unauthorized layover at home. That was control.

The court did provide some examples of what might be construed as control. An employer may, for example, restrict an employee from traveling more than five minutes away from the worksite during a ten-minute break because if she does, she will be unable to return to the worksite before the break ends. But control may exist if a worker, although off duty, remains on call. And if employees face disciplinary action for not responding to an employer during rest breaks, the employer may be exercising control. The question of control boils down to whether the employee may use break or non-work time however he or she would like.

This article was written by Darlene M. Clabault, SHRM-CP, PHR, CLMS, of J. J. Keller & Associates, Inc.