The Fifth Circuit Reminds Employers of When Travel Time is Compensable and the Importance of Accurate Time Records

Earlier this month, in United States Dep’t of Labor v. Five Star Automatic Fire Prot., L.L.C., the Fifth Circuit Court of Appeals affirmed a Western District of Texas decision in which the court determined that the time the plaintiffs were required to spend driving from the employer’s maintenance yard to the job site was compensable. The Fifth Circuit also affirmed the lower court’s determination that the plaintiffs’ testimony on the number of hours they worked was sufficient for the purpose of backpay calculations. The following analyzes the Court’s opinion and provides some key takeaways for employers likely to encounter travel-time questions, particularly in the oil field services industry.

The Fifth Circuit Affirms that Travel Time from a Yard to a Job Site is Compensable when the Employer Ties the Travel to a Job Duty.

In Five Star Automatic Fire Protection, the Department of Labor sued Five Star alleging that it failed to compensate its construction employees for compensable travel time. Five Star paid its construction employees by the hour and required them to record their time on handwritten timesheets; however, the employees testified that their supervisor discouraged them from reporting time spent traveling to or from job sites. The employees also testified that they were discouraged from recording time spent between job sites when they worked on more than one job site in a workday.

Five Star required the employees to report to its yard to pick up a company vehicle and to drive that vehicle to the job site. Helpers were given the option of reporting to the yard to ride to the job site with the foremen or driving their personal vehicles to the job site. However, both helpers and foremen were required to report to the job site 30 minutes before their scheduled shift and to load equipment and materials during that time. The lower court reasoned, and the Fifth Circuit affirmed, that because the Foreman were required to report to the yard to pick up the company vehicle before reporting to the job site for their scheduled shift, such travel time was part of the foremen’s job duties, and therefore was compensable. Similarly, the time spent loading equipment and materials before the start of the shift was a compensable job duty.

The Fifth Circuit Affirms that Employee Testimony is Sufficient to Establish Hours Worked for the Purpose of Damages Calculations when an Employer Fails to Maintain Accurate Timesheets.

Under the Supreme Court’s decision in Anderson v. Mt. Clemens Pottery Co., if “the employer’s records are inaccurate or inadequate,” a plaintiff need only show by “just and reasonable inference” that he was an employee, worked the hours, and was not paid for those hours. The burden then “shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negative the reasonableness of the inference.” This lenient standard is intended to encourage employers to keep accurate payroll records, which are the best evidence of hours worked. In practice, an employer’s reliance on its classification of a worker as exempt from the FLSA’s overtime requirements to excuse its obligation to maintain accurate records of hours worked can prove to be a detriment if employees alleging to have been misclassified sue the employer for unpaid overtime.

The district court applied Mt. Clemens because Five Star’s “bare-bones timesheets” left several evidentiary gaps, including that the employees testified that their supervisor urged employees not to record their time spent loading equipment or traveling to and from the job site before and after their scheduled shifts. Five Star’s rebutted the employees’ testimony with only a summary chart based on the company president’s memory of hours worked. Five Star argued that the employees’ testimony failed to account for variations in the employees’ schedules such as vacation time or days on which they did not have to stop at the yard before going to the job sites. Five Star also emphasized the variations in the employees’ testimony; namely, some employees testified that the supervisor instructed them to refrain from reporting travel time while others testified that they failed to report the travel time because they believed that they would not be compensated for it.

The Court rejected Five Star’s arguments and reasoned that the company president’s memory of hours worked was insufficient to overcome the lenient Mt. Clemens standard, meaning that the employees’ testimony alone was enough to establish the hours they worked. And, after holding that their pre- and post-liminary work time was compensable, the practical effect of this standard allowed the employees’ testimony to suffice as the only evidence of the number of hours of wages owed.

The Bottom Line

The Five Star Automatic Fire Protection holding highlights several important reminders for employers:

  1. The rules on what constitutes compensable time are notoriously difficult to apply. Employers should consult their labor and employment counsel when determining whether time spent on a task is compensable and whether the employer’s timesheets fulfill its record-keeping obligations under the FLSA. Each position is unique and separate analyses are necessary to account for the nuance of duties involved in each position.
  2. Employers should take advantage of written communications to employees explaining when work is compensable. The written communication should also explain that supervisors and managers do not have authority to supersede the written company policy.
  3. The actions of a rogue supervisor in forcing off-the-clock work will be imputed to the company. Employers should be sure to implement a policy discouraging off-the-clock work and should establish active checks on the communications that supervisors make to their subordinates to ensure that the supervisors are acting in accordance with the policies.
  4. Employers should establish a formal complaint system encouraging employees to report any suspected violations of company policies including wage and timekeeping policies. An employee’s failure to make a formal complaint in accordance with the policy can serve as a defense.