Ninth Circuit Clarifies When Travel and Commuting Time Must be Paid -- Rutti v. LoJack

In Rutti v. LoJack, the Ninth Circuit examined the issue of which employee activities must be counted as "hours worked" and which may be disregarded as non-compensable.  In doing so, it touched upon most of the important issues raised in so-called "off-the-clock" cases.  It also applied these rules under both the FLSA and California Labor Code (where there is currently a dearth of authority on the subject). 

As a result, Rutti it is an important case for both employers and plaintiffs that warrants several distinct posts.  This entry focuses on the Ninth Circuit's ruling on commuting time.

In that regard, Rutti reemphasized the familiar rule that commuting time (i.e., travel time from home to the first place of employment for the day) need not be paid under the FLSA or California Labor Code. 

Under federal law, the 1996 Employee Commuting Flexibility Act (“ECFA”), 29 U.S.C. Sec. 254(a)(a)(2), generally excludes "traveling to and from the actual place or performance of the principal activity or activities which such employee is employed to perform."

Under California law, Labor Code section 510(b), likewise provides that "[t]ime spent commuting to and from the first place at which an employee's presence is required by the employer shall not be considered part of the day's work." 

Rutti held that this commuting rule applies even where the employee is required to use a company vehicle and is restricted from making unauthorized stops or engaging in personal business. 

Rutti did allow that an employee's travel time could become compensable if he were  required to perform any "additional legally cognizable work" during his commute.  The Court gave no specific examples of such work.  However, making work related cell phone calls or entering data in an on-board  computer system would seem to be likely real-world examples of such activities that would have to be paid even if they are done during otherwise non-compensable commute time. 

Ninth Circuit Approves Whistleblower Claim by In-House Counsel

In Van Arsdale v. International Game Technology, the Ninth Circuit reversed the grant of summary judgment against the retaliation claims of a husband and wife who worked together as in-house counsel and who claimed to have been wrongfully terminated for raising internal concerns about potential Sarbanes-Oxley violations.  

In reaching this result, the Court made clear that even a Company's own in-house counsel may bring retaliation claims when their internal counselling activities are not well-received.  The district court had found the lawsuit should be barred as contrary to the attorney-client privilege and the ethical obligations requiring confidentiality.  The Ninth Circuit, however, felt there was nothing fundamentally incoherent in allowing an internal whistleblower suit by legal counsel so long as the district court took steps to shield confidential information from public disclosure.

 To the extent this suit might nonetheless implicate confidentially-related concerns, we agree with the Third Circuit that the appropriate remedy is for the district court to use the many “equitable measures at its disposal” to minimize the possibility of harmful disclosures, not to dismiss the suit altogether. . . . Nothing in this section indicates that in-house attorneys are not also protected from retaliation under this section, even though Congress plainly considered the role attorneys might play in reporting possible securities fraud.

The Ninth Circuit seemed unconcerned that its decision may damage the attorney-client relationship and chill internal legal analysis.  Indeed, the decision may even prompt many companies to rely more heavily on the advice of outside counsel -- where the relationship is strictly legal and not compromised by the panoply of rights accorded to an internal employee.  

Technology blurs work/life definition

On-call time<div xmlns:cc="" about=""><a rel="cc:attributionURL" href=""></a> / <a rel="license" href="">CC BY-NC 2.0</a></div>

The WSJ notes the increase of lawsuits pertaining to when employees need to be compensated for on-call time or for time checking electronic devises away from the workplace. As the article notes, there have been a fair share federal cases, but California employers have no doubt been at the tip of this arrow. 

California’s DLSE takes the position that on-call or standby time at the work site needs to be paid for even if the employee does nothing but wait for something to happen. “[A]n employer, if he chooses, may hire a man to do nothing or to do nothing but wait for something to happen. Refraining from other activities often is a factor of instant readiness to serve, and idleness plays a part in all employment in a stand-by capacity”.

The DLSE opines that employees may be paid for on-time work such as when the employee is not relieved of duties during meal periods and sleep periods when the employees are subject to the employer’s control.

What constitutes “work-time” and therefore must be paid depends on the restrictions placed on the employee. A variety of factors are considered in determining whether the employer-imposed restrictions turn the on-call time into compensable “hours worked.” These factors, set out in a federal case, Berry v. County of Sonoma, include whether there are very restrictive geographic limits on the employee’s movements; whether the frequency of calls is unduly restrictive; whether a fixed time limit for response is unduly restrictive; whether the on-call employee can easily trade his or her on-call responsibilities with another employee; and whether and to what extent the employee engages in personal activities during on-call periods.

Travel time

The DLSE also considers travel time compensable work hours where the employer requires its employees to meet at a designated place and use the employer’s designated transportation to and from the worksite. The leading case on this topic in California is Morillion v. Royal Packing Co. (2000) 22 Cal.4th 575.

Bank of America pays $33 million in SEC Fines for Excess Bonuses

Employee bonuses continue to be a hot political issue.  The most recent exhibit was the SEC's announcement on Monday that Bank of America would pay $33 million in fines for not telling its shareholders that Merill Lynch would be allowed to pay $5.8 billion in executive bonuses prior to its merger with BofA.

While BofA's shareholders have every right to be upset about the non-disclosure, they must surely be wondering what good was accomplished by the SEC's action.  The $33 million fine is infinitesimal next to the $50 billion merger deal or the $5.8 billion in undisclosed bonuses.  But even more conceptually problematic is that the SEC fine will be paid by the same shareholders who were the victims of the non-disclosure in the first place.  So instead of an even $5.8 billion, the BofA shareholders are now out of pocket for $5,833,000,000. 

At least the settlement made headlines and allowed the administration to underline its moral outrage against excessive bonus compensation.