What is compensable time?

By G. Phillip Shuler

A federal court has concluded that employees of a concrete cutting construction business are entitled to be paid for preparation and cleanup work at their employer's yard and for travel time if they were required to stop at the yard before traveling to the first jobsite at the beginning of the day or before traveling home at the end of the day. Ladegaard v. Hard Rock Concrete Cutters (N.D. Ill., August 18).

The court also ruled that travel time was not compensable for travel time from home to the employee's first job of the day or home from the last job of the day. The "preparation" work, which required employees to report to the yard before reporting to the jobsite, included the following:

• picking up work orders
  
• filling the truck's water tank and/or portable gas tank
  
• picking up additional equipment
  
• hooking up trailers
  
• performing safety and operational checks on the truck or trailer.
  The "clean up" work, which required employees to report to the yard at the end of the day, included the following:
  
• turning in completed work orders
  
• dropping off trailers or equipment
  
• changing oil in the truck
  
• dropping off debris, such as concrete slabs, that was removed from the work site

The court ruled that the preparation and clean up tasks were part of the employee's "principal activities" as defined in the Fair Labor Standards Act (FLSA) and therefore constituted compensable time.

The predominant activity of Hard Rock's employees was cutting concrete. Having tools, supplies and equipment available and properly functioning, having water necessary for performing the cutting process, unloading debris, cleaning equipment and completing paperwork were all activities necessary for the predominant activity of concrete cutting.

"All these activities benefited Hard Rock. Thus, on any day that a Hard Rock employee performed some preparation at the yard, his time spent performing that activity and the travel time from the yard to the jobsite is compensable under the federal and state statutes. Similarly, on any day that a Hard Rock employee performed some cleanup in the yard, his time spent performing that activity and the travel time from the last jobsite to the yard is covered by (the FLSA).

"The court rejected the employer's argument that it was not liable for the "preparation" or "clean up" work at the yard because it did not require it. The court said that "[i]t is the duty of management to exercise its control and see that the work is not performed if it does not want it to be performed. It cannot sit back and accept the benefits without compensating for them."

Under the FLSA, work is compensable if an employer knew or should have known that the work was being performed. Noting that a supervisor's knowledge is sufficient to prove that an employer is aware that work was being performed, the Ladegaard court pointed to evidence that there were at least three supervisors in the yard when the drivers and the helpers were performing preparation and clean up activities.

Employees also contended that the employer's violation was willful, entitling them to the longer three-year limitations period.

Citing the U.S. Supreme Court's ruling in McLaughlin v. Richland Shoe Co., (485 U.S. 128 (1988)), the Ladegaard court noted that the standard for "willfulness" under the FLSA is "that the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the statute."

Personnel files: how to manage them? Federal and state laws require employers to keep files on their employees. Employers must be careful to protect employee privacy and avoid the appearance of discrimination by keeping certain pieces of information separate from others.

Personnel files are private and confidential. Usually the employer, not the employee, owns personnel files.

In Louisiana, as in most states, the following people have the right to inspect personnel files:

• Current or former employees, who can see their own files to identify errors, and occasionally to make copies, usually under supervision;
  
• employees with a legitimate need for the information in the file, such as an employer's supervisor or the human resources director; and
  
• Equal Employment Opportunity Commission (EEOC) investigators looking for violations of Title VII or the Americans with Disabilities Act (ADA).
  A personnel file contains all kinds of job-related information, from the date an employee is hired until the employee leaves that employer. It can contain documents such as:
  
• The employee's application
  
• letters offering or accepting a job
  
• job description
  
• W-4 form
  
• copies of credentials
  
• hours worked
  
• pay information
  
• training records
  
• performance reviews and awards
  
• disciplinary letters
  
• emergency contact information
  
• electronic documents such as emails and calendars
  
• anything else legitimately related to the job.

Because a personnel file is accessible to people with the power to make tangible employment decisions, they should never contain documents that could breach employee confidentiality or raise the possibility of discrimination. The following items should be stored separately:

• Medical records
  
• I-9 forms
  
• affirmative action information
  
• references
  
• credit reports
  
• grievances and formal complaints
  
• information that identifies employees by categories such as race, sex, religion, age or national origin
  
• drug screening records
  
• criminal records.
  A medical file may contain information such as:
  
• Applications for health and life insurance
  
• requests for medical leaves and personal accident reports
  
• information on medical conditions and disabilities
  
• workers' comp reports
  
• Family Medical Leave Act (FMLA) documents
  
• Occupational Safety and Health Administration (OSHA) injury reports
  
• any document with personal medical information

According to the ADA, the Health Insurance Portability and Accountability Act (HIPAA), FMLA and many state laws, these records must be kept separate from the main personnel file. Very few employees should have access to these files and an employer should never disclose medical information without some legitimate medically dictated reason to do so.

If you have paper files, keep them locked in a secure place, such as the human resources office.

Employees should never keep their own personnel files. If you have electronic files, make them secure. Only people who need to know what the files contain should have access to them.

Computerized storage can solve many of the logistical problems involved in keeping hard copies of all employee records, saving space and making data retrieval easier. The main concern with digital records is security; the same rules of privacy still apply, so any employer who decides to keep personnel and medical files in electronic format must be careful to ensure that only authorized individuals have access.

Even if most of your records are in electronic format, you will still need secure physical storage for any paper forms such as I-9 or W-2 forms.

Many states have their own laws regarding the retention of documents, which might mean that employers must keep documents longer than required by federal law. Here are some of the federal requirements: Title VII, ADA, and American Discrimination in Employment Act (ADEA) - one year (payroll records for three years); Fair Labor Standards Act (FLSA) - two years for records on hiring, firing, etc.; three years for pay information; FMLA - three years; OSHA - five years; Internal Revenue Services (IRS) - four years.

Editor's Note: G. Phillip Shuler is a partner in the New Orleans office of Chaffe, McCall, Phillips, Toler & Sarpy.