Overtime Pay for Work-Related Smartphone Use

Follow these steps to reduce your risk of overtime liability.

Key point 8-08.6. The Fair Labor Standards Act exempts employees employed in an executive, administrative, or professional capacity from the minimum wage and overtime pay provisions. To be covered by one of these exemptions, an employee must perform specified duties, and be paid a salary in excess of a specified amount.

A federal court in Illinois refused to dismiss a lawsuit claiming that the City of Chicago violated the Fair Labor Standards Act by failing to pay police officers overtime pay for the use of smartphones for work-related business during nonworking hours.

A Chicago police sergeant (the "plaintiff") sued the City of Chicago on behalf of himself and all other employees of the Chicago Police Department against the City of Chicago, alleging that the City violated the Fair Labor Standards Act ("FLSA") by failing to pay plaintiffs all the compensation they were due.

The plaintiff claimed that, at various points in the last three years, he and other employees of the police department were issued personal data assistants ("PDAs") or other electronic communication devices. He further alleged that:

  • he and other employees were "required to use" those devices to perform work outside of normal working hours without receiving compensation—including overtime compensation;
  • police work was "routinely and regularly accomplished through the use of these PDAs";
  • without these PDAs and the work routinely performed while off-duty, the police department would be far less successful in accomplishing its law enforcement objectives;
  • he received numerous telephone calls, e-mails, voice mails, and text message work orders on his PDA while off the clock, and was expected to respond to these communications throughout the night and into the early morning hours while off duty without being compensated for the time he spent doing so;
  • he and other employees were not paid overtime for the excess hours they worked during off-duty hours using their PDAs; and
  • the city did not keep appropriate records as required by the FLSA to determine wages, hours, and other conditions and practices of employment.

The plaintiff sought monetary damages in the form of overtime compensation equal to the unpaid compensation and overtime compensation due all police department employees, plus interest, and reasonable attorney's fees, costs, and expenses.

The city asked the court to dismiss the lawsuit for failure to state a claim upon which relief could be granted. The court declined to do so, noting that the plaintiff's claim had sufficient merit to proceed to trial. The court acknowledged that "de minimis" (i.e., minimal) compensable time is "not recoverable under the FLSA." It referred to a federal regulation that states: "In recording working time under the Act, insubstantial or insignificant periods of time beyond the scheduled working hours, which cannot as a practical administrative matter be precisely recorded for payroll purposes, may be disregarded." 29 C.F.R. § 785.47.

This rule applies to "uncertain and indefinite periods of time involving a few seconds or minutes duration."

The city also argued that plaintiff failed to allege the amount of time he spent off duty, beyond a de minimis amount, responding to PDA communications that required his immediate response. The court responded: "Whether the amount of time plaintiff worked off the clock is greater than a de minimis amount, however, is a matter of the proof of his claim, not a matter of the sufficiency and plausibility of his complaint. We are mindful that some courts have required more detailed allegations as to the type and amount of work that allegedly earned FLSA overtime compensation …. [But] the elements that must be shown are simply a failure to pay overtime compensation … and failure to keep payroll records in accordance with the Act."

The court concluded:

The plaintiff pleaded that he was entitled to overtime pay because he "routinely and regularly" responded to phone calls, e-mails and work orders off the clock, as expected by the police department. He further has alleged that he was not paid for the excess hours worked, and that the city failed to keep appropriate records. These allegations of FLSA violations are plausible, and they give the city adequate notice of the claim. Whether plaintiff can prove what he has plead remains to be seen after discovery.

What This Means For Churches

This is the first case that we have seen to address employer liability for overtime based on employees' use of cell phones during non-working hours for business purposes. This court suggested that liability may arise, so long as the cell phone use is documentable and not "de minimis." The case now proceeds to trial, unless it is settled. Future developments regarding this and similar cases will be addressed in future editions of Church Law & Tax Report. For now, church leaders should consider some obvious steps to reduce this potential risk of an overtime pay liability:

  1. Only issue cell phones to employees who clearly satisfy the definition of "exempt employees" under the FLSA. Exempt employees include administrative, executive, and professional employees. Ministers generally are considered professional employees. See sections 8-08.5 and 8-08.6 in Richard Hammar's Pastor, Church & Law (4th ed. 2008) for a full explanation of these exemptions.
  2. If you currently issue cell phones to non-exempt employees, review each case to determine if there is a legitimate business need to do so.
  3. If you determine that a legitimate business need exists for issuing cell phones to one or more non-exempt employees, then require these employees to keep accurate records of their business use of the device that should be cross-checked against the church's monthly cell phone bills for confirmation. The employer has a duty under the FLSA to maintain these records. Obviously, this is going to be an administrative burden for the church that may prompt a reconsideration of which employees really need a church-provided cell phone.
  4. If you determine that a legitimate business need exists for issuing cell phones to one or more non-exempt employees, then consider a policy that requires these employees to leave their church-provided cell phones in their church office during non-working hours. Allen v. City of Chicago, 2011 WL 941383 (N.D. Ill. 2011).
  5. Employment Practices

    See (1) "Compensation," Allen v. City of Chicago, 2011 WL 941383 (N.D. Ill. 2011), and (2) "Minimum wage and overtime pay," Alcazar v. Corporation of the Catholic Archbishop, 627 F.3d 1288 (9th Cir. 2010), and (3) "Privacy," Duncan v. Peterson, 947 N.E.2d 305 (Ill. App. 2010), in the Legal Developments section of this website.

    Fair Labor Standards Act

    See "Minimum wage and overtime pay," Alcazar v. Corporation of the Catholic Archbishop, 627 F.3d 1288 (9th Cir. 2010), in the Legal Developments section of this website.

FLSA and the Ministerial Exception

Federal court rules that a seminarian cannot claim unpaid overtime compensation.

Church Law & Tax Report

FLSA and the Ministerial Exception

Federal court rules that a seminarian cannot claim unpaid overtime compensation.

Key point 8-08.7. Ministers who are employed to perform ministerial services, and who are paid a salary that meets or exceeds the “salary test,” are professional employees exempt from the provisions of the Fair Labor Standards Act. Ministers not compensated on a salary basis, or who earn a salary below the salary test, may not be covered by the Act. Department of Labor regulations suggest that the Act does not apply to any ministers, and a few federal courts have ruled that the so-called ministerial exception prevents the application of the Act to ministers.

A federal appeals court ruled that it was barred by the so-called “ministerial exception” from resolving a seminarian’s claim for unpaid overtime compensation. The court noted that federal courts “have grappled with determining whether a particular church employee, though not ordained, nevertheless should be considered a ‘minister’ for purposes of the ministerial exception.” It declined to adopt a specific test for deciding who is a ministerial employee, since “under any reasonable construction of the ministerial exception [a seminarian] meets the definition of a minister.” It concluded:

We hold that the First Amendment considerations relevant to an ordained minister apply equally to a person who, though not yet ordained, has entered into a church-recognized seminary program to become a minister and who brings suit concerning employment decisions arising from work as a seminarian. The principle of allowing the church to choose its representatives using whatever criteria it deems relevant necessarily applies not only to those persons who already are ordained ministers, but also to those persons who are actively in the process of becoming ordained ministers. Similarly, we can no more ask the church for a religious justification for its decisions concerning seminarians (ordained ministers in training) than we can ask the church to articulate a religious justification for its personnel decisions concerning its ordained ministers …. [The plaintiff] challenges the sufficiency of his wages for duties performed as part of his seminary training to become an ordained Roman Catholic priest. Because the ministerial exception applies to those claims, we affirm the district court’s dismissal of the complaint.

What This Means For Churches:
This case is significant for three reasons. First, it is a decision by a federal appeals court, which lends considerable force to its conclusions. Second, the court ruled that the ministerial exception applies to seminarians and others involved in training to become a minister, as well as to currently active ministers. Third, the court concluded that the ministerial exception applied not only to employment disputes between churches and clergy pertaining to selection, termination, and discrimination, but also to claims under state and federal minimum wage and overtime pay laws. Alcazar v. Corporation of the Catholic Archbishop, 627 F.3d 1288 (9th Cir. 2010).

This Recent Development first appeared in Church Law & Tax Report, November/December 2011.

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