Smartphones: increasing productivity, creating overtime liability.

• Author: Luttenegger, Jana M.

1. INTRODUCTION II. BACKGROUND A. Purpose and Enactment of the FLSA B. The Portal-to-Portal Act C. Coverage Under the FLSA D. White-Collar Exemption Under the FLSA 1. Salary Test 2. Duties Test E. Defining Work F. Overtime Provisions G. Damages and Remedies for Violations III. ANALYSIS A. Voluntary Work B. Policies Against Overtime 1. Knowledge of the Time Worked 2. Employer Duty to Prevent Unwanted Work 3. How Much Time Is Required? C. On-Call Time D. De Minimis Time IV. Recommendation A. Congress Should Amend and Clarify the FLSA B. The DOL Should Update Its Regulations C. Employers Should Be Proactive V. CONCLUSION I. INTRODUCTION

   Advancements in technology are blurring the line between work time and leisure time, creating what has been termed "weisure time." (1) Experts say this mixture of work and leisure causes more Americans to use technology to stay connected and work while away from the office, for example checking e-mails while attending a child's sporting event. (2) Society has recognized the problems this creates for employees and their families. (3) However, these advancements also create problems for employers because the Fair Labor Standards Act (FLSA) only defines compensation requirements for work time, not for "weisure time."

   One piece of technology at the heart of this "weisure time" is the smartphone. Although there is no standard definition, the term smartphone typically refers to a mobile phone enhanced with computer technology, including e-mail, internet access, and the ability to create and edit documents. (4) Such a technological advance is enticing for both employers and employees. Employers view smartphones as a way to always be able to contact employees, to increase worker productivity, and in some situations to improve customer service by keeping employees accessible and able to respond to customer problems or concerns. (5) Employees also see advantages from the technology, finding it gives them flexibility by allowing them the freedom to get away from the office and still stay connected. (6) As workers move up the corporate ladder, the availability and flexibility offered by a smartphone often becomes essential--if not required--for the job. (7) However, as smartphones become increasingly affordable and more popular, more and more Americans--not just salaried corporate executives--are joining the smartphone trend. (8) While some employees have phones from their employer for business use, others are getting smartphones for their own personal use. When hourly employees check their work e-mails from personal smartphones, many wonder if such time is compensable. (9) Compensation issues like this become increasingly significant in a struggling economy. As employers are looking to cut costs--including labor costs--while still maintaining productivity, employees are competing with coworkers to retain their positions and are looking to receive adequate compensation for such work. (10) Additionally, former employees who have not found other work due to the high unemployment rates are more likely to bring claims now that they may not otherwise have brought. (11)

   This Note examines the FLSA and its application to time employees spend using smartphones. Specifically, Part II examines the FLSA, its overtime coverage for certain employees, and the basic definitions laid out in the FLSA. Part III analyzes the varying applications of those definitions by courts regarding: voluntary overtime, what makes time compensable, on-call time, and de minimis time. Finally, Part IV explains the changes Congress and the Department of Labor need to make to clarify the act, and what employers can do in the meantime to protect themselves from overtime claims by employees using smartphones outside of work without the employer's permission.

2. BACKGROUND

   Wage and hour regulation is likely "the oldest form[] of workplace regulation in the United States." (12) The federal government has directly regulated wages and hours since colonial times. (13) In 1630, Massachusetts set a wage cap for certain craftsmen because the shortage of skilled workers had caused wages to rise to a level nearly double what similar workers were earning in England. (14) Starting in the early 19th century, workers were concerned with the number of hours they were required to work and pressured employers to limit hours. (15) During and following the Depression, unemployment was widespread and the high demand for such a limited number of jobs resulted in low pay for the few workers who could find employment. (16) As a result of the Depression, Congress saw the need for wage regulation to protect the standard of living for employees and their families and for hour regulation to spread the work among more employees. (17)

   1. Purpose and Enactment of the FLSA

      Prior to enacting the FLSA, debates about wage and hour regulation in Congress during the 1937-1938 session focused on the economic implications for both employers and employees. (18) One supporter argued that legislation covering wages and hours would stop employers from cutting the wages of the defenseless workers who already had poor living conditions. (19) On the other hand, a challenger of the bill argued that the bill would not increase employment and living standards, but would result in factories closing and going into bankruptcy from the higher wages. (20) Nevertheless, Congress enacted the FLSA in 1938 to correct and eliminate working conditions that Congress found to be "detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers"; conditions that burdened commerce, lead to labor disputes, and constituted an unfair method of competition. (21)

   2. The Portal-to-Portal Act

      In 1947, Congress passed the Portal-to-Portal Act (22) to clarify overtime compensation for activities considered "preliminary" or "postliminary" to the principal work activity. (23) The Portal-to-Portal Act excludes certain activities from the FLSA provisions, meaning the employer is not required to compensate employees for time spent walking or traveling to or from the location of the employee's principal work activity, or for "activities which are preliminary to or postliminary to said principal activity." (24) The Supreme Court resolved a circuit split regarding this act in IBP, Inc. v. Alvarez. (25) The Court held that any activity that is "integral and indispensible" to performing a "principal activity" is also a principal activity, and so long as it is performed during a continuous workday, the activity is covered by the FLSA and compensable. (26) The Court further clarified that just because certain pre-shift activities were necessary did not make those activities integral and indispensable. (27)

   3. Coverage Under the FLSA

      First and foremost, the FLSA only covers an employer-employee relationship. (28) Independent contractors, undocumented workers, and children under certain ages are not considered employees and therefore are not covered under the FLSA. (29) Originally, the FLSA determined coverage based solely on the activities of the individual employee, but an amendment in 1961 added enterprise coverage. (30) Under enterprise coverage, if a business is a covered "enterprise," then every employee is covered by the FLSA regardless of the individual employee's activities, saving the employer from individually reviewing each employee's duties. (31) Many employers are covered as a "dollar-test enterprise" if the employer has at least one worker whose activities deal with or affect interstate commerce and the business has yearly gross sales of at least $500,000. 32 The FLSA language discussing commerce is so broad that most employers deal with or affect interstate commerce for the purposes of the statute. (33) Even if the employer is not a covered enterprise, an individual employee may still be covered under individual coverage if the employee is himself "engaged in commerce or in the production of goods for commerce." (34)

   4. White-Collar Exemption Under the FLSA

      Certain industries and employees may be exempt from provisions of the FLSA even though the workers are considered "employees" and "covered." Most significant for this Note is the white-collar exemption, which classifies any employee in a "bona fide executive, administrative, or professional capacity" as exempt from minimum wage and overtime provisions. (35) Employees in executive, administrative, and professional capacities will be exempt if the employee's salary and duties meet the requirements for one of the classifications; an exemption is not based on title alone. (36) The employer bears the burden of proving that the employee qualifies for the exemption. (37)

      one of the most common misconceptions about exemptions is that if a worker is paid on a salary basis, as opposed to an hourly basis, he is exempt from overtime. (38) Although required for the white-collar exemption, the fact that an employee is paid on a salary basis is not sufficient for the employer to claim the exemption; the employee must also meet a minimum salary level and perform certain duties to qualify. (39) Similarly, a non-exempt employee may be paid on a salary basis, but must still receive at least one and one-half times the regular rate for any hours worked over 40 in a workweek. (40)

      1. Salary Test

         The required minimum salary for the white-collar exemption is $455 per week ($23,600 annually). (41) An employee is considered paid on a salary basis if the employee regularly receives the same amount each week and such amount is not subject to reductions for the actual number of hours or days worked or for the quality of work performed. (42) Professional and administrative employees may receive compensation on a fee basis and retain the exemption so long as the pay for the week would be at least $455 if the employee worked 40 hours. (43)

      2. Duties Test

         In addition to meeting the salary requirement...