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9th Cir.: Time Spent by Call Center Workers Booting Up Computers is Compensable

Cadena v. Customer Connexx LLC

The time a group of call center workers spent booting up their computers is inextricably intertwined with their work and therefore compensable under the Fair Labor Standards Act (FLSA), the Ninth Circuit ruled this week, overturning a win a district court handed to their employer, and joining sister circuits who have reached a similar conclusion.

In a unanimous published decision, the Ninth Circuit reversed a Nevada district court’s 2021 decision which had granted call center employer Customer Connexx LLC summary judgment on the workers’ overtime suit, reasoning that the workers needed to have a functional computer in order to do their jobs. Thus, the panel concluded that the time the call center workers spent booting up the computers is compensable under the Portal-to-Portal Act.

“The employees’ duties cannot be performed without turning on and booting up their work computers, and having a functioning computer is necessary before employees can receive calls and schedule appointments,” U.S. Circuit Judge Jay S. Bybee wrote on behalf of the panel.

Under the Portal-to-Portal Act, which amended the FLSA, employers are not required to pay for time workers spend traveling to and from the place of principal work activities or for time they spend on certain preliminary or postliminary activities which are not integral to their work.

Here, the workers sued in 2018, alleging that Connexx, failed to pay them overtime as required by the FLSA and Nevada law, because they failed to track and compensate them for the time they spent booting up and turning off their computers after they logged into and out of the company’s timekeeping system.

The district court granted Connexx summary judgment in July 2021, finding that the tasks the workers completed before and after they logged out of the company’s timekeeping system were not compensable preliminary and postliminary activities because they did not meet the legal standard to be considered part of their jobs.

The Ninth Circuit disagreed and reversed, saying the district court erred in focusing its reasoning on whether the activities were essential to the workers’ jobs and should have instead put emphasis on whether starting the computer led the call center workers to be able to perform their work. Discussing the issue, the Court explained:

When the employees’ duties are understood in this way, the electronic timekeeping system becomes a red herring. It is a convenience to the employer… It has no impact on the ‘integral and indispensable’ analysis except to show us when Connexx began counting the employees’ time.

Because the workers needed to have “a functional computer … turning on or waking up their computers at the beginning of their shifts is integral and indispensable to their principal activities,” the panel concluded.

The Ninth Circuit also rejected Connexx’s argument that the district court’s decision should be affirmed because the pre-shift time was de minimis and because the company was not aware of the alleged overtime, noting that those are “factual questions” that the lower court didn’t address, and thus not properly before it.

Of note, the panel clarified in a footnote that its opinion focused on the pre-shift activities, and stated that its opinion should not be read to hold that turning the computers off was an integral part of the workers’ jobs.

The Department of Labor had filed an amicus brief in support of the workers, in which it argued the time at issue was compensable under the FLSA, because the workers could not do their jobs without booting up the computers.

Click Cadena v. Customer Connexx LLC to read the entire decision.

*** Andrew Frisch and Morgan & Morgan are actively handling and investigating similar cases on behalf of call center workers. If you believe your call center employer is not paying you for all time worked, contact us for a free consultation at (888) OVERTIME [888-683-7846] today. ***

3d Cir.: Flat-rate Payment Scheme Constituted Commissions; Nutrisystem Sales Associates 7(i) Exempt

Parker v. Nutrisystem, Inc.

This case was before the Third Circuit on Plaintiffs appeal of summary judgment in favor of Defendant.  Plaintiffs were sales associates, employed in Defendant’s call center, who completed sales orders on behalf of Defendant.  It was undisputed that Defendant’s business was “retail” in nature.  Thus, the only issue before the court was whether the District Court correctly concluded that NutriSystem’s method of compensating its call-center employees constituted a commission under the FLSA so that Nutrisystem was exempt from paying Appellants overtime.  The court concluded that the compensation constituted a commission and affirmed the ruling below.

Describing the pay methodology at issue, the Court said:

“In March 2005, NutriSystem implemented the compensation scheme for sales associates at issue in this case. Under the plan, sales associates receive the greater of either their hourly pay or their flat-rate payments per sale for each pay period. The hourly rate is $10 per hour for the first forty hours per week, and $15 per hour for overtime. The flat rates per sale are $18 for each 28-day program sold via an incoming call during daytime hours, $25 for each 28-day program sold on an incoming call during evening or weekend hours, and $40 for each 28-day program sold on an outbound call or during the overnight shift. These flat rates do not vary based on the cost of the meal plan to the consumer.

The majority of the sales associates are compensated based on these flat rates, not their hourly earnings. Under the compensation plan, sales associates do not receive overtime compensation when they are paid the flat rates for the sales made. There is no change to the flat rates when a sales associate works more than forty hours in one week.”

In affirming the decision that this pay constituted commissions under the FLSA, for the purposes of the 7(i) exemption, the Court reviewed  the legislative history of the applicable regulations, the limited case law and the DOL’s opinions and reference materials.

Dissenting, Judge Cowen took issue with the majority’s holding that commissions were proportional to the sales prices of the good sold here.  First, Judge Cowen noted:

“Unlike the majority, I would afford Skidmore deference to the Department’s view that in order to constitute a commission for purposes of § 7(I), the amount of compensation paid to the employee must be proportionally related to the amount charged to the customer. Because NutriSystem failed to demonstrate the requisite proportionality, its compensation plan cannot be considered a bona fide commission plan under § 7(I).”

Applying this definition to commissions, Judge Cowen reasoned that here, because the flat rates were not proportional to the products sold, the flat rates did not constitute commissions:

“The majority then concludes that NutriSystem’s compensation plan meets this definition because the payments made to its sales associates are “sufficiently proportional” to the cost to the consumer. Id . While I do not object to the majority’s contention that § 7(I) requires a proportional relationship between employee compensation and customer costs, I cannot agree that NutriSystem has demonstrated such a proportional relationship here.

It is undisputed that NutriSystem’s meal plans vary in price depending on the type of meal plan the customer chooses and the length of the customer’s commitment. It is likewise undisputed that the flat-rate fee paid to a sales associate does not vary depending on the type of plan the customer chooses or the length of the customer’s commitment. NutriSystem clearly has not demonstrated that the flat-rate fees are proportionally related to the cost to the customer. While neither the plaintiffs nor the Department suggests that a commission must be based on a strict percentage of the end cost to the consumer, the flat-rate payments in this case do not correspond at all with the end cost to the consumer. Rather, the flat-rate payments are based on the time the sale is made and whether it results from an incoming or outgoing call. The fact that NutriSystem can perform math to portray its flat-rate fees as percentages of customer costs does not transform the fees into commissions.

Therefore I am unable to agree with the majority and would reverse and remand for further proceedings.”

To read the entire decision and dissent click here.

Sprint To Pay Over 1,000 Call Center Workers Unpaid Wages For Time Spent Working Off-the-Clock

As published on Tricities.com, the Bristol Herald Courier is reporting that “Sprint has paid nearly $259,429 in back wages and a $120,000 fine after a federal labor investigation revealed the telecommunications giant did not pay overtime to 1,013 workers from its Bristol call center at 134 Commerce Court.

The U.S. Department of Labor investigation focused on the roughly nine minutes before the start of shifts between July 2005 and June 2007. During that time, employees review company e-mails and download computer applications, labor spokeswoman Leni Fortson said.”

To read the full article regarding Sprint’s payment to call center workers go to Tricities.com

Call centers of companies of all sizes frequently violate wage and hour laws, by failing to pay customer service employees for all time worked. If you believe your call center employer of former call center employer has failed to pay you for all hours worked, call us at 1-888-OVERTIME or go to http://www.overtimeadvocate.com/2.html for a free consultation today.