Kenneth W. Di Gia, Michael A. Kalish, Michael F. McGahan, Traycee E. Klein, Peter M. Panken, A. Jonathan Trafimow, and Lauri F. Rasnick, Editors
Epstein Becker & Green, P.C.

Vol. 15, No. 7
July 2008

WAGE AND HOUR LAW

Office in your pocket: BlackBerry® use may lead to overtime lawsuits

In today's technological climate, it seems that almost every employee, from the CEO to the rank-and-file worker, uses some type of personal digital assistant (PDA) or BlackBerry® device. PDAs and BlackBerries® have a number of uses: calculator, clock, calendar, video recorder, address book, word processor, radio, and even Global Positioning System device. They can also be used to access the Internet, create and write on spreadsheets, and play computer games or as mobile phones and portable media players. But most important, PDAs and BlackBerries® can be used to send and receive e-mails.

In addition, at a time when the stock market fluctuates and the presidential candidates debate over how to solve the nation's complex economic problems, employees are becoming more and more concerned about job security. Without a doubt, the job market in America is becoming more competitive as businesses, large and small, work to maintain revenues and keep afloat during the recession.

All of that has resulted in what could be deemed a "perpetual workplace" in which employees at all levels find themselves working harder and longer hours to stand out in the crowd. Many employees can't easily separate when they're working from when they aren't. Even when they leave the workplace at night or are outside the office during lunch, on weekends, or on vacation, they increasingly are checking or typing away on their PDAs or BlackBerries®, responding to work-related e- mails. So if those hardworking employees are nonexempt workers under the Fair Labor Standards Act (FLSA), is the time they spend on their PDAs compensable? Some say it is.

FLSA's overtime provisions

The FLSA generally requires covered employers to pay employees at least the federal minimum wage for all hours worked and overtime premium pay of one and a half times the regular rate of pay for all hours worked over 40 in a single workweek. The law includes a number of exemptions from its minimum wage and overtime requirements, including for workers employed in a bona fide administrative, executive, or professional capacity or as an outside salesperson. It also provides an exemption for certain computer employees. Employees who fit into any of the exemptions are deemed "exempt" employees because they are exempt from the FLSA's overtime provisions. Employees who don't fit into any of the exemptions are deemed "nonexempt" employees since they aren't exempt from ― and therefore must be paid according to ― the FLSA's overtime provisions.

The general rule is that nonexempt employees must be paid for "all hours worked." The standard used to determine whether time is actually "hours worked" is whether the employee is "suffered or permitted to work." A nonexempt employee who isn't compensated for "all hours worked" can claim up to two ― and in some cases three ― years of back overtime or wages. Additionally, the FLSA provides a mechanism for employees to file class-action lawsuits for unpaid overtime on their own behalf and on behalf of similarly situated employees.

Consequently, it's imperative to properly classify employees as exempt or nonexempt under the FLSA's provisions and guidelines. The administrative exemption is available if an employee's primary duty relates to management or general business operations and requires discretion and independent judgment about "matters of significance." The executive exemption is available if an employee's primary duty involves managing a business, directing two or more subordinates, and hiring or firing other employees. Also, any employee involved in management who has at least a 20 percent equity interest in the business can be considered exempt.

The professional exemption is available if an employee's primary duty involves performing work that requires some specialized knowledge generally acquired through a four-year college degree. That usually means the work must be varied and intellectual and must consistently involve the use of judgment, as opposed to the occasional exercise of independent judgment that the administrative exemption requires. Outside salespersons may be classified as exempt if they regularly work outside their employer's place of business and their primary duty is making sales or obtaining contracts or orders. Finally, generally speaking, computer employees may be classified as exempt if they work as computer systems analysts, computer programmers, software engineers, or other similarly skilled computer employees.

What's the danger?

The use of PDAs or BlackBerries by nonexempt employees is a hot topic right now in the labor and employment arena. A new wave of lawsuits may be brewing on the theory that nonexempt employees who use PDAs or BlackBerries to send and respond to work- related e-mails after hours should be paid for that time. Internal complaints about not being compensated for "PDA time" will most likely come from disgruntled employees, but there's a risk involved for all nonexempt employees. The time an employee spends on his PDA or BlackBerry outside the office can really add up, and you may find yourself in the difficult situation of defending a lawsuit in which an employee claims to have worked a great deal of overtime but your records don't reflect the actual number of hours he worked.

Indeed, time worked outside the office is very difficult for an employer to track. Although PDAs and BlackBerries may leave time- and date-stamped e-mail trails indicating when a message was sent or received, they don't show how much time the employee spent reviewing and thinking about an e-mail or how much time he spent drafting a response. Thus, you should take precautions now.

What you can do now to avoid liability

The biggest danger with nonexempt employees using PDAs or BlackBerries after working hours is the potentially misclassified worker. In that situation, the employer has been treating the worker as exempt and therefore not tracking her work hours. If the worker files an FLSA claim, there will likely be a factual dispute over the amount of hours she actually worked. So first of all, you should conduct an internal wage-and-hour audit or work with employment counsel to ensure that you are properly classifying your current employees and aren't classifying employees who are really nonexempt as exempt.

To further prevent an overtime lawsuit, you should head off problems before they occur by creating, with the aid of counsel, specific policies and procedures that address nonexempt employees' use of PDAs and BlackBerries . Your policies and procedures should state, at a minimum, that nonexempt employees must report any work time spent using PDAs and BlackBerries .

You should also consider placing limitations on when nonexempt employees can use the devices after hours. Some employers may want to require that employees first get permission before using their PDAs or BlackBerries after work hours, while others may choose to sidestep the issue altogether by issuing company-owned devices only to exempt employees. Keep in mind, however, that if a nonexempt employee purchases her own PDA or BlackBerry and uses it to perform work outside the office, you may still be liable for overtime claims, even though the device wasn't company-provided.

Finally, be mindful of how much and how often you encourage your employees to use PDAs and BlackBerries . Some employers expect their employees to be constantly accessible through some form of communication. In other workplaces, employees independently check their PDAs or BlackBerries , even if there's no formal requirement or expectation that they do so. In either case, nonexempt employees should be advised that you don't expect them to spend more than a minimalamount of time checking messages from outside the office and that they should report on their time sheets any time spent outside work checking e-mails when it exceeds a minimalamount.

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Copyright 2008 M. Lee Smith Publishers LLC

NEW YORK EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in New York employment law. Questions about individual problems should be addressed to the employment law attorney of your choice.