Ninth Circuit – Time Booting Up Computer is Compensable

Customer,Service,Executive,Working,At,OfficeUnder the Fair Labor Standards Act (“FLSA”), an employer must pay non-exempt employees for all time in a workday, which means the period between the time employees commence their first “principal activity” each day and when they complete all principal activities. On October 24, 2022, the United States Court of Appeals for the Ninth Circuit (“the Ninth Circuit”) held that this includes the time it takes to boot up a computer and all activities that follow once it is booted up, including clocking in, until the computer is turned off.

The decision was very fact-specific but provides insight as to how the Ninth Circuit and other courts may evaluate similar time spent by other employees for whom computer-use is an integral and indispensable part of the work they were employed to perform.

Facts and Background of the Case

In the case, Cadena v. Customer Connexx LLC, employees brought a collective action against their employer Customer Connexx LLC (“Connexx”) for failure to pay them for all time worked, specifically the time spent booting up and turning off their computers. The employees worked as call center agents and their primary responsibilities were to provide customer service and scheduling support for customers of an appliance recycling business over the phone. In this case, however, the call center agents operate a phone program called “Five9” through their computers rather than an actual phone and this is how they make all their calls.

Importantly, before beginning their daily work tasks, employees had to clock in using a computer-based timekeeping program, which meant awakening or turning on their computers, logging in, and opening up the time keeping system. Employees do not have assigned computers, so they must take this first step from whatever state in which the computer has been left from its prior use. Once the computer has booted up, employees load various programs and call scripts, and confirm their phones are connected. At the end of the shift, they close out programs in use, clock out, then log off or shut down their computers. Per the employees, booting up the computer could take anywhere from a minute to twenty minutes and shutting down the computer can take between a minute to 15 minutes.

The lawsuit was filed with the United States District Court for the District of Nevada (“District Court”) and it included violations of the FLSA and Nevada law. The District Court granted summary judgment in favor of Connexx, finding that Continue reading

Ninth Circuit Rules that Agreements Precluding Employees from Bringing Class Action Claims Violate Federal Labor Law

In a sweeping ruling with far-reaching implications for California employers, the Ninth Circuit Court of Appeals – the federal appellate court for the Western United States – has concluded in Morris v. Ernst & Young, LLP that an employer violates the National Labor Relations Act (NLRA) by requiring employees to sign agreements precluding them from bringing class action or other collective actions regarding their wages, hours, or other terms and conditions of employment.

This decision presents a significant departure from existing, ever evolving law that employers have been navigating in considering class action waivers. In 2014, the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC held that class action waivers in arbitration agreements are enforceable under the Federal Arbitration Act (FAA) but that representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) are unwaivable under California law. The PAGA has been an egregious enforcement mechanism permitting employees to bring collective actions seeking penalties and attorneys’ fees for wage and hour violations, no matter how minor. The Ninth Circuit in Sakkab v. Luxottica Retail North America, Inc. subsequently ruled that the FAA does not preempt California’s Iskanian rule prohibiting the waiver of representative claims under PAGA.

The path forward following Iskanian and Sakkab for California employers seeking to ensure legal compliance has been to require the waiver of traditional class actions, and not PAGA actions, to avoid running afoul of the law. There has been some security in this position and, indeed, last month the California Supreme Court in Sandquist v. Lebo Automotive, Inc. implicitly recognized the continuing enforceability of class action waivers in deciding a procedural question over whether the arbitrator or judge has authority to determine whether a particular agreement permits or prohibits class action arbitration.

Following Ernst & Young, however, employers located in the Ninth Circuit may now find themselves facing an unfair labor practice charge before the National Labor Relations Board, by seeking to enforce class action waivers or merely inserting such prohibition into arbitration agreements. The Ninth Circuit has reasoned that an employer’s arbitration agreement prohibiting class actions interferes with the right to engage in concerted activity under the NLRA for the purpose of collective bargaining or “other mutual aid or protection.” The Ninth Circuit found that the FAA, which recognizes the enforceability of arbitration agreements, must yield to federal substantive rights such as the right to engage in concerted activities under the NLRA.

It is important to note that the federal appellate courts are divided on this issue, with the Second, Fifth and Eighth Circuits concluding that the NLRA does not invalidate collective action waivers in arbitration agreements and the Seventh Circuit agreeing with the Ninth Circuit’s position. In all likelihood this issue will make it to the U.S. Supreme Court as the final arbiter but until then employers should tread lightly in drafting and seeking to enforce employee arbitration agreements barring collective actions.