A technician who commutes in a company car from his home to his first customer does some paperwork before driving to his first customer. After driving from the last customer to his home, he performs some additional activities for the company. Does the employer have to pay for this commute time? Is the time spent doing paperwork and other activities pre- and post-commencement of the work day considered compensable?

On August 21, 2009, the Ninth Circuit in Rutti v. Lojack held that merely because employees commute to work in company-owned vehicles does not render commuting time compensable under the Fair Labor Standards Act or the California Labor Code. However, employers must compensate employees for certain work activities before and after their regular work day.

Facts

Lojack required the technicians to drive Lojack owned vehicles pursuant to Lojack rules. Lojack also required the technicians to perform certain activities before and after the time they officially began and ended their work days. A Lojack technician, Mike Rutti, brought a class action lawsuit on behalf of himself and over 450 nationwide Lojack technicians who installed and repaired vehicle recovery systems in customers’ cars. Rutti argued that his use of the vehicle was not voluntary and that restrictions placed on his use of Lojack’s vehicle rendered his commute compensable. The restrictions prohibited Rutti from using the vehicle for personal pursuits and transporting passengers, required him to drive directly from home to work and work to home, and required him to have his cell phone turned on while driving.

Requiring Employees to Commute in Company Vehicles Does Not Make Commuting Time Compensable

The Ninth Circuit looked to the Employee Commuting Flexibility Act (“ECFA”), a federal statute passed in 1996 which provides that where the use of an employer’s vehicle “is subject to an agreement on the part of the employer and the employee,” the use of the vehicle is not part of the employee’s principal activities and is, therefore, not compensable. The Ninth Circuit, examining the legislative history of the ECFA, found that it was of no moment that the employee preferred to drive his own vehicle, provided he agreed to drive the company vehicle in an employment agreement.
 
The Ninth Circuit also found that the mere fact that the employer placed restrictions on the vehicle use did not render the time spent commuting to the first customer from home and from the last customer back home compensable. Because Rutti did not identify any legally cognizable work Lojack required him to perform while commuting, the employer did not have to compensate the employee for the driving time.
 
Rutti next argued that his commuting time was compensable under California law because he was “subject to the control of the employer” during the driving time. The Ninth Circuit rejected this argument because Rutti was free to determine when he left his home or work, the order of his route, and which assignment he drove to first. The Ninth Circuit relied on California Labor Code § 510 which 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 to be a part of a day’s work when the employee commutes in a vehicle that is owned, leased or subsidized by the employer and is used for the purpose of ridesharing.”¹

Employers Must Compensate Employees for Activities That are Preliminary or Postliminary to Principal Activities Provided Such Time is Not De Minimis

In addition to exempting commuting time for compensation, the ECFA also provides that an employee need not compensate an employee for “activities which are preliminary or postliminary² to said principal activity or activities.” The Ninth Circuit explained that the term “principal activities” should be construed liberally, regardless of where the work is performed, and involves both an analysis of whether the activities are performed as part of an employee’s regular work and the extent to which the work impacts the employee’s freedom to engage in other activities. However, even “principal work” is not compensable when it is de minimis. To determine whether otherwise compensable time is de minimis, the Ninth Circuit considered: (1) the practical administrative difficulty of recording the additional time; (2) the aggregate amount of compensable time; and (3) the regularity of the additional work.

Rutti sought compensation for the preliminary morning activities, of “receiving mapping and prioritizing jobs and routes for assignments.” The Court held that these activities were related to his commute, which was not compensable and clearly distinct from his principal activities for Lojack. While it appeared that Rutti also filled out some forms for his job at home, he presented no evidence that he was required to do so before he started work. Given that he could have filled out the forms once he began work at the job site, the work was not compensable. Furthermore, even if the preliminary activities were considered distinct from his commute and related to his principal activities, the Ninth Circuit explained that the time he spent performing preliminary activities was de minimis and not compensable for that reason.

Rutti fared better with respect to his claim for compensation for the “postliminary” activity of sending a transmission on a portable data terminal to Lojack using a modem provided by the company. Lojack required the transmissions to be made daily as they provided Lojack with information concerning the jobs each technician performed. Opining that the transmissions appeared to be part of the regular work of Rutti and the class members, and that the time spent sending the transmissions was anywhere between five and fifteen minutes a day, the work was not necessarily de minimis. The Ninth Circuit held that the district court erred in granting summary judgment for Lojack and remanded the case to the Central District of California.

What Employers Need to Know

While the Rutti decision is good news for employers with respect to requiring non-exempt employees to commute in employer-provided vehicles, employers should remember the following general principles:

• Commuting time in an employer provided vehicle may be compensable if non-exempt employees are required to perform work while commuting;
• Employers are required to compensate non-exempt employees whose commute time exceeds their commute time to their regular reporting place; and
• Any work non-exempt employees perform prior to and after their regular work day which is related to their principal activity and not de minimis is compensable.

¹ Lojack did compensate the technicians for time driving between customers so this was not an issue.

² “Postliminary” is the term used in the Employee Commuting Flexibility Act.