As general matter the federal Fair Labor Standards Act (the “FLSA”) requires employers to compensate employees for all the time employees have worked no matter where and when the work is done. However, an exception exists called the De Minimis Doctrine which permits employers not to pay employees when employees spend a small amount of time on tasks that by their nature are difficult for the employer to track or record. Specifically, the Department of Labor (“DOL”) codified the De Minimis defense in 29 C.F.R. § 785.47 which in pertinent part reads:
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. The courts have held that such trifles are de minimis. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). This rule applies only where there are uncertain and indefinite periods of time involved of a few seconds or minutes duration, and where the failure to count such time is due to considerations justified by industrial realities. An employer may not arbitrarily fail to count as hours worked any part, however small, of the employee’s fixed or regular working time or practically ascertainable period of time he is regularly required to spend on duties assigned to him. Glenn L. Martin Nebraska Co. v. Culkin, 197 F. 2d 981, 987, (C.A. 8, 1952)
Similarly, the United States Supreme Court describes De Minimis time as “split second absurdities” that “are not justified by the actualities of working conditions or the policy of the [FLSA].” Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 691-93 (1946). Common examples of an employees work that could be classified as De Minimis time, would be the time an employee spends, locking or unlocking doors when entering or leaving work, turning on or shutting off lights when entering or leaving work, checking in and out tools before or after work, and powering up or down a work computer. www.wagehourblog.com.
Courts use a three-factor balancing test when analyzing De Minimis legal issues: (1) the practical administrative difficulty of recording the additional time; (2) the size of the claim in the aggregate; and (3) whether the [employee] performed the work on a regular basis.’” Aguilar v. Mgmt & Training Corp., 948 F.3d 1270, 1284 (10th Cir. 2020) (quoting Castaneda v. JBS USA, LLC, 819 F.3d 1237, 1243 (10th Cir. 2016)). Before courts implement the balancing test analysis, courts “must first estimate the amount of time at issue.” Id. Further, “[t]here is no precise amount of time that maybe denied compensation as de minimis.” Id.
The problem with the three-factor De Minimis balancing test is that it does not yield consistent outcomes the way a bright line rule would; this is because it requires a highly fact sensitive case-by-case analysis, resulting in potentially contradictory outcomes. For example, most recently, the Tenth Circuit found in Peterson v. Nelnet Diversified Sols., LLC, employees working as Call-Center Representatives (“CCR”), who spent time at work starting their computers, for the purpose of clocking into work, was not De Minimis time. Nos. 19-1348, 20-1217, 2021 U.S. App. LEXIS 30273, at *38 (10th Cir. Oct. 8, 2021)
In Peterson, the Tenth Circuit Court of Appeals reversed and remanded to trial the District Court’s order awarding summary judgment in favor of Defendant-Employer: Nelnet Diversified Solutions, LLC (“Nelnet”), in a class-action suit commenced by Plaintiff-Employees, composed of approximately over three hundred of Nelnet’s CCR employees (“CCR Plaintiff[s]”). Id. at 2. A CCR’s job duties working for Nelnet primarily consisted of servicing student loans by communicating or interacting with borrowers through phone calls and email messages. Id. The CCR Plaintiffs alleged Nelnet failed to compensate them for time devoted to starting up work-computers and launching certain software before clocking into work. Id.
On appeal, the Tenth Circuit Court weighed the administrative burden factor in favor of the CCR Plaintiffs because Nelnet could “simply estimate the amount of time at issue. When the amount of time at issue can be reasonably estimated, the practical administrative burden tends to be low and weighs against a de minimis finding.” Id. at 22. The Circuit Court emphasized that Nelnet possessed readily accessible data regarding the average time CCR Plaintiffs spent booting up computers. Thus, Nelnet failed to particularly identify any practical administrative barriers to estimate the amount of time at issue. Second, the Circuit Court concluded the aggregation factor did not weigh in any parties favor because “neither the total aggregate claim of $31, 585 nor a properly estimated individual claim of approximately $125 per year is extremely large, particularly when compared to other de minimis cases.” Id. at 33-34. More importantly, the Circuit Court rejected the District Court’s “baseline approach” in concluding aggregation weighed in favor of Nelnet, “specifically rejecting such cursory treatment of the aggregate factor and finding ‘err[or] in treating Monfort as if it set a baseline below which all claims are negligible.’” Id. at 31-32. Finally, the Circuit Court, like the District Court, concluded that the regularity of time factor weighed heavily in favor of the CCR Plaintiffs because, “[c]ourts often apply the de minimis doctrine when employees do not regularly engage in the activities at issue.” Id. Here, every CCR regularly engaged in using time at work to power up their computer to clock in and start their shift. Id. For these reasons, the Circuit Court found the District Court erred in granting Nelnet’s motion for summary judgment. Id. at 36-37. Peterson illustrates how the De Minimis doctrine balancing test analysis can be highly context dependent, where factually comparable cases nonetheless have differentiating outcomes.
If you believe you have been the victim of unpaid wages in violation of the FLSA and/or the New Jersey Wage and Hour Laws, do not hesitate to call the attorneys at Mashel Law (732) 536-6161 or fill out the contact form on this page for immediate help At Mashel Law, LLC, located in Marlboro, New Jersey, we are dedicated to protecting the rights of employees.