Reposted from the Labor & Employment Law Navigator Blog - Click Here to Subscribe
Governor DeWine recently signed into law Senate Bill 47 (SB 47), which primarily aims to clarify employers’ overtime-pay obligations under Ohio law. The Bill takes effect on July 6, 2022.
As discussed below, the Bill does some good – it expressly integrates the FLSA’s Portal-to-Portal Act exemptions into the Ohio statute; additionally, it limits a plaintiff’s procedural mechanisms for pursuing Ohio class-wide wage and hour claims in court. But the Bill also leaves several unanswered questions, and most importantly, it contains express carve-outs that arguably expand employers’ overtime-pay obligations.
1: The Good: Adopting Portal-to-Portal Act and De Minimis Exceptions; Limiting Procedural Mechanisms Applicable to State Class-wide Lawsuits
SB 47 expressly adopts the exceptions to compensability provided by the “Portal to Portal Act” (PPA) amendments to the federal Fair Labor Standards Act (“FLSA”), as well as the FLSA’s de minimis exemption. Specifically, under the FLSA —and now, too, SB 47— an employer need not pay overtime wages for time spent:
- Engaging in normal commuting to and from work;
- “Performing activities that are preliminary to or postliminary to the principal activity or activities”; or
- Engaging in “activities requiring insubstantial or insignificant periods of time beyond the employee’s scheduled working hours” (known as “de minimis” time).
While these changes are nominally impactful, courts had already interpreted Ohio law as including these exceptions even prior to SB-47. Their practical utility is therefore limited. Nonetheless, having these important principles codified in the law is welcomed for employers.
Also welcomed are the Bill’s changes to the procedures for bringing class-wide wage-and-hour lawsuits under Ohio law. Under existing law, a plaintiff may purse such actions as “class actions.” This mechanism includes all members into the class unless the member expressly “opts out” of the action. Under SB 47, however, opt-out wage-and-hour actions are now prohibited.
Instead, consistent with federal FLSA procedures, such actions now must be brought as “collective actions,” a mechanism which requires each class member to give written consent to “opt in” to the action. Typically, opt-in actions creates much smaller classes than “opt-out” actions.
2. The Bad: Carve-Outs that Potentially Expand Employers’ Overtime Obligations and Additional Ambiguities
Although the Bill generally adopts the FLSA’s PPA exceptions, it doesn’t do so wholesale. It rather includes certain carve-outs that the PPA does not. Most notably, employers must pay overtime on all activities that are “specifically directed by the employer,” as well as those which are performed “pursuant to a custom or practice applicable to the activity.” These exceptions contradict judicial interpretations of the PPA and existing Ohio law.
Interpreting the PPA, the U.S. Supreme Court has clarified that off-shift activities are not compensable merely because the employer requires them. Integrity Staffing Solutions v. Busk, 135 S. Ct. 513 (2014)(“[I]f the test could be satisfied merely by the fact that an employer required an activity, it would sweep into ‘principal activities’ the very activities that the [PPA] was designed to address”). Nor are they compensable because they make the rest of the job easier or safer. Rather, such activities are only compensable if they are both (1) integral to (i.e., an “intrinsic component of”) the principal activity the employee was hired to perform and are (2) indispensable to his or her performance of that activity (i.e., the employee effectively cannot perform the principal activity unless he also performs the off-shift activity).
Applying this “integral and indispensable” test, courts have frequently rejected claims for a number of mandatory off-shift activities, including for time spent:
- waiting in line to undergo, and undergoing, mandatory post-shift security screenings;
- maintaining and laundering uniforms;
- changing into and out of required uniforms;
- performing pre- and post-trip vehicle inspections; and
- reporting to a site and waiting to be assigned work.[1]
Under SB 47, however, employers may be required to pay for time spent performing these activities, so long as they are employer -“direct[ed].” This is presumably true regardless of whether the activity meets the more-stringent “integral and indispensable” test described above. Consequently, SB 47 may entitle employees to compensation for activities that are not currently covered by existing Ohio and federal law.
Moreover, while the Bill aims for clarity, it creates several important ambiguities. For instance:
- Did the drafters intend to expand employers’ overtime obligations for pre- and post-liminary obligation beyond what is required by the FLSA?
- The Bill’s definition of “de minimis” time is more expansive than that applied to the FLSA: unlike SB 47, the FLSA requires the time occur such that, “as a practical administrative matter,” it cannot be “precisely recorded.” Was SB-47’s omission of this limitation intentional?
- The Bill only covers “overtime.” Does this mean the employer-directed off-shift activities must occur before an employee works 40 regular weekly hours before pay is required, or are these activities merely aggregated with all other work hours—no matter when they occur— and are thus compensable if the employee exceeds 40 total hours?
3. Concluding Thoughts and Practical Advice
SB 47’s aim to clarify Ohio’s overtime law is generally positive. Indeed, because the FLSA’s integral and indispensable test is largely fact-specific, identifying the line between compensable and non-compensable activities can be arduous, and courts sometimes reach inconsistent results. The Bill may reduce some of that ambiguity. But in doing so, the Bill ostensibly increases the likelihood that employer-directed off-shift activities will be subject to overtime obligations.
The Bill takes effect on July 6. In the meantime, employers should carefully investigate and identify any activities, however insignificant, that employees may be performing before or after they clock in and out. If those activities are being encouraged or directed by the employer, they may need to be tracked and paid. Employers should also update their handbooks to specifically prohibit off-the-clock work and create a procedure for reporting alleged off-the-clock activities to management or Human Resources.
[1] See Busk, 135 S.Ct. 513 (time spent waiting in line and undergoing mandatory pre- and post-shift security screenings was not compensable); Dinkel v. Medstar Health Inc., 99 F. Supp. 3d 37, 42 (D.D.C.2015) (employees not entitled to time spent maintaining and laundering uniforms); Pippen v. Global Technical Recruiters, Inc., No. 1:21 CV 00311, 2021 U.S. Dist. LEXIS 111392 (N.D. Ohio June 15, 2021) (time spent changing into and out of required uniforms not necessarily compensable); Campbell v. Empire Merchants, LLC, No. 16-CV-5643 (ENV) (SMG), 2018 U.S. Dist. LEXIS 146510, at *21 (E.D.N.Y. Aug. 27, 2018) (employees not entitled to pay for time spent reporting to site and waiting to be assigned work); Brand v. Comcast Corp., 135 F. Supp. 3d 713 (N.D. Ill.2015) (cable technicians not entitled to pay for time spent performing pre-trip vehicle inspections).