One of the trickier areas of wage and hour compliance is calculating hours worked when non-exempt employees travel on company business. There are several different situations that the wage and hour regulations address. One is “travel that is all in a day’s work” another is “home to work on a special one-day assignment in another city,” and the third is “travel away from home community.”
Travel That is All in a Day’s Work
Travel that is all in a day’s work is travel time that happens in any given work day. To and from any work-sites or jobs must be counted as hours worked. The exception to this is travel from home to the job and back again at the end of the day.
Home to Work on a Special One-Day Assignment in Another City
Home to work on a one-day assignment may involve travel from home to work that is not ordinary because it is performed for the employer’s benefit to meet a special request of the employer. The regulations state that this would qualify as an “integral part of the principal activity which the employee was hired to perform on the workday in question” and would be hours worked.
Travel Away from Home Community
Overnight Travel is where an employee must travel “away” to go to a job activity. The person travelling may be “on the clock” if they are travelling during normal work hours or if not, are doing some work while travelling. Preparing in some way for the work ahead is hours worked as far as wage and hour is concerned. So counting hours worked while travelling (even on weekends) depends on the time of travel and what occurs during that time.
Last week the federal Sixth Circuit Court of Appeals that covers Michigan as well as five other states held that an employer did not underpay all but one of its workers for travel time required of them as part of their jobs. In the case of Steven Abell et.al. v. Sky Bridge Resources LLC (16-5990) 13 workers brought a suit against their employer alleging that the employer improperly paid them during their entire employment for travel time. The employees alleged violations of both the Fair Labor Standards Act (FLSA) and the Kentucky Wage and Hour Act. Both laws address travel time as hours worked the same.
The employer set up an employment agreement, referred to as a Kindred contract where all hours “travelling on an airplane” were paid at half the rate they were normally paid while working. The employer kept records of airplane travel as “Hours Travelled” vs. regular work hours as “Hours Worked” and (except for one worker) paid travel time at the lower rate. Employees under this agreement were paid time and one-half for hours worked over 40 hours in a week The employer’s agreement did not count travel hours outside of the normal workday toward the 40 hour overtime requirement.
The workers sued the employer claiming they should have been paid full wages for time travelling.
The lower court ruled in favor of the employer, and the Sixth Circuit Court of Appeals affirmed that under both Kentucky and federal wage and hour law, worktime for overtime purposes is considered “when it cuts across the employee’s workday.” The Court found that Kentucky wage and hour code did not define workday and opted to use the federal regulation (790.6(b)) under the Portal-to-Portal Act, which could be read to mean workers’ travel time outside the workday was not considered hours worked. This ruling seems a bit counter-intuitive, and one judge on the panel dissented stating the Court misinterpreted regulations and should have reviewed hours worked under rule 785.39 of Wage and Hour regulations. The Appeals Court ruling addresses this anomaly by finding that the argument for proper counting of hours worked, which was not brought forth at the lower court level, was not considered upon appeal.
One of the 13 plaintiffs was allowed to continue his suit because the company had paid his full wages for travel before his pay was set up under the same agreement as the other workers.
What can employers take from this decision?
Employers that require non-exempt employees to travel overnight need to ensure hours worked are properly recorded. The situation above involved a special agreement between employer and employee. Employers that do not set up a separate agreement for travel pay need to follow the wage and hour rules for travel and hours worked. It is recommended that employers that may benefit from a different pay rate and hours worked agreement consult with wage and hour legal counsel to set up an agreement that will withstand legal challenge.
Sources: ABELL v. SKY BRIDGE RESOURCES, LLC 16-5990 10/19/2017; 6th Circ. Affirms Toss Of Travel Pay Suit But Revives 1 Claim LAW 360 10/19/2017