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Ninth Circuit Reverses Itself and Finds Commute Time in Company Car Compensable

March 10, 2010

In an earlier Bingham alert, we discussed the August 2009 Ninth Circuit decision in Rutti v. Lojack, in which the court held that time spent by non-exempt employees commuting to and from work in employer-owned vehicles is not compensable under either the Fair Labor Standards Act or the California Labor Code. The court also held that activities before and after the work day could be compensable where they relate to an employee’s “principal activities” and are not de minimis.

After a remand to the United States District Court, the case made its way back up to the Ninth Circuit, and in a March 2, 2010, decision, the Ninth Circuit reversed its previous decision to find that under California law, such commute time is compensable where the employer exercises significant control over the employee during the commute time.

Facts

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. Lojack required its installation technicians to drive Lojack-owned vehicles pursuant to Lojack rules from their homes to the first work location, to and from each of the customer locations, and on return from the last customer call of the day back to the employee’s home. Lojack also required the technicians to perform certain activities before and after the time they officially began and ended their work days. Rutti argued that his use of the company vehicle was not voluntary and that restrictions placed on his use of Lojack’s vehicle rendered his commute compensable. The restrictions included a ban on use of the company vehicle for personal pursuits and transporting passengers, a requirement that he drive directly from home to work and work to home, and a requirement that he have his cell phone turned on while driving.

Federal Law Claims

The March 2, 2010, decision virtually duplicates the August 21, 2009, decision as to the federal claims. The court, construing the Employee Commuting Flexibility Act (“ECFA”), held that simply because an employment agreement requires an employee to commute in a company vehicle, the employer need not compensate an employee for time spent commuting. Additionally, because Lojack’s restrictions on Rutti’s commute did not constitute “additional legally cognizable work,” Rutti was not entitled to compensation for his commuting time.

Addressing Rutti’s off-the-clock activities, the court found that the time Rutti spent before leaving his home for work to map out his routes and job priorities was distinguishable from his “principal activities” for Lojack, and therefore not compensable. Even assuming that the opposite were true, the court found the time Rutti spent performing preliminary activities was de minimis. However, the court did agree with Rutti that he should be compensated for the daily “postliminary”1 activity of uploading data about his daily work activities and sending the data to his employer because such transmissions appeared to be “principal activities,” and the time spent (about 15 minutes a day) was not necessarily de minimis. The Ninth Circuit remanded the case to the Central District of California.

California Law Claims

Whereas in 2009 the Ninth Circuit rejected Rutti’s argument that under California law his commute time was “subject to the control of the employer” and therefore compensable under Morillion v. Royal Packing Co.,2 the March court found the opposite, holding that commute time in a company-owned vehicle can be compensable where the employer exercises significant control over the employee’s commute. The court found the fact that Rutti was required to drive the company vehicle, could not stop for personal errands or carry passengers during his commute time, was required to drive the vehicle directly from home to his job and back, and was forbidden from using his cell phone for anything other than business calls, which he had to take, demonstrated a significant level of control as to render the time compensable work time. California Labor Code § 510, which excludes from work hours time spent commuting to and from the employee’s first place of work, did not apply to such compulsory travel time.

Significance for Employers

While the latest Rutti decision remains good news for employers with respect to the non-compensability of commute time even in a company-owned vehicle, employers must beware that if they cross the line by exerting substantial control over the employee’s behavior during the commute, they may have to compensate the employee’s commute time. Likewise off-the-clock work related to employees’ work duties which is not de minimis must be compensated.

For more information on this alert or any other labor and employment issues, please contact any of the lawyers listed below:

Boston
John Adkins, john.adkins@bingham.com, 617.951.8551
Jenny Cooper, jenny.cooper@bingham.com, 617.951.8473
Louis Rodriques, Co-chair, Labor and Employment Group, louis.rodriques@bingham.com, 617.951.8340

Los Angeles/Orange County
Jacqueline Aguilera, jackie.aguilera@bingham.com, 213.229.8439
Debra Fischer, debra.fischer@bingham.com, 213.680.6418

San Francisco
James Severson, james.severson@bingham.com, 415.393.2242

New York
Douglas Schwarz, douglas.schwarz@bingham.com, 212.705.7437

Tokyo
Mie Fujimoto, mie.fujimoto@bingham.com, 81.3.6721.3138

Endnotes

1 This term is used in the ECFA. The Ninth Circuit used this term to describe the timing of activities after the employee’s primary job functions.

2 22 Cal. 4th 575, 578 (2000).

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