Employers Should Beware of Compensable Time Compliance Pitfalls

Employers do not have much practical guidance to ensure compliance with federal and state compensable time laws, but adopting certain payroll policies can provide some legal protection, an attorney said May 11.

Court cases and laws provide much of the legal guidance for compensable time compliance, but they can be too vague for employers looking to improve their compensable time policies, said Daniel Messeloff, a partner at Tucker Ellis LLP. Many court decisions and laws establish terms associated with compensable time that are not clearly defined, he said.

“There are no definitions to a lot of these terms,” Messeloff said. “The reason that a lot of these terms are so hard to define is that workplaces vary so much. You can’t say that an employee in your office does the same thing, arrives at the same time, and does the same preliminary and postliminary tasks as someone else in another office, even for someone in the same position.”

Compensable time includes any activity that is an integral and indispensable part of an employee’s principal employment and activities, but determining whether an activity is integral and indispensable is difficult, he added. Federal courts have different opinions as to what type of activities are integral and indispensable.

The U.S. Supreme Court provided a definition of integral and indispensable activities in the 2014 case Integrity Staffing Solutions, Inc. v. Busk. An activity is integral and indispensable to an employee’s principal activities if it “is an intrinsic element of those activities, and one with which the employee cannot dispense if he is to perform his principal activities,” Messeloff said.

Employers should consider whether an employee activity is compensable time by determining if the employee activity is either a principal activity or an integral and indispensable activity to the employee’s principal activity, he added. If it is either, it is compensable time.

State v. Federal Laws

Some states have stricter compensable time laws than the federal government, and employers should be aware of any state-specific laws and regulations that may affect them, Messeloff said at the American Payroll Association’s 40th Payroll Congress.

“States can enact their own laws,” he said. “They can be different from federal laws. You can say ‘Well, you don’t have any claim under federal law,’ but employees can have the claim under state law.”

For example, California is a state with different compensable time laws than the federal government, he added. Unlike federal law, California law determines compensable time based on whether employees were under the control of the employer.

“When you have compensable time issues, you have to determine not just what is the employer’s role but also whether there are any state-specific differences or variables that might impact an employee’s compensable time,” he said.

Compensable Time Compliance Tips

Payroll professionals can improve their compensable time compliance by conducting time studies, Messeloff said. Time studies measure the length of time it takes employees to perform different types of work-related tasks.

“There are some tasks that may arguably be compensable,” he said. “But if it is de minimis and only takes a few seconds or a minute to perform, then you don’t really have to worry about it. That’s why there’s sense in doing time studies to see how long these tasks take.”

Employers should also allow employees to edit their time cards as necessary, he added. Employees that edit and submit their own time cards will have difficulties claiming that employers did not properly compensate them for certain work-related activities, he said.

“Devise realistic, practical policies which will in and of themselves avoid legal claims and ensure that employees are paid properly,” he said.