A
$3.5 million to settle a long-running lawsuit challenging its pay practices for
travel time. We’ll explain the case and review the rules for when you must pay
for time your employees spend traveling.
Mandatory Transportation
Policy
D’Arrigo Brothers
Company of
transportation policy that required agricultural employees to report before
work to a designated departure point (a parking lot) and board buses that
D’Arrigo provided. The buses then transported the workers to various worksites.
Employees were not permitted to drive directly to a work site, even if it was
closer to their home than the designated meeting point. At the end of each
workday, employees couldn’t leave the worksite immediately, but had to wait for
their foreman to finish up administrative tasks before the bus could transport
everyone back to the parking lot.
D’Arrigo paid employees
on a piece rate basis, determined by the quantity of vegetables picked, but employees
received a guaranteed hourly minimum instead if that worked out to more than
the piece rate for a particular day, as the law requires. D’Arrigo neither paid
employees extra for the travel time from the parking lot to the work site and
the return trip—each of which took up to 50 minutes—nor for the time the employees
spent waiting at day’s end before they could board the buses, which sometimes
added up to another 20 minutes.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Wage-Hour Suit Filed
A group of agricultural
workers filed a class action suit against D’Arrigo, claiming that the company’s
failure to pay for their travel and waiting time violated
sought back wages and penalties. D’Arrigo asked the court to dismiss the suit,
contending that it properly compensated its employees using the piece rate
method and didn’t have to pay extra for travel or waiting time.
Court Sides with Workers
A federal trial court in
favor.1 The court explained that
the California Industrial Welfare Commission wage order covering the employees
here, Wage Order 14-80, provides that the employer must pay at least the
minimum wage “for all hours worked…whether the remuneration is measured by
time, piece, commission, or otherwise.” And, an earlier California Supreme
Court case established that all time agricultural workers spend under their
employer’s control, including mandatory travel and waiting time, counts as
hours worked.
An employer may use a
pay per hour scheme or piece rate scheme, said the court, as long as that amount
is at least the sum the employee would have been paid according to this
formula: number of hours worked (including compulsory travel and waiting time) multiplied
by the minimum wage. Thus, an employer is liable for unpaid wages if it paid
less than that formula requires, even if a piece rate method was legitimately used.
The court rejected the
employees’ argument that the wage order required D’Arrigo to pay for each
separate hour of travel and waiting time regardless of how much it paid them
for other work during the pay period. The court stressed that as long as the
employer pays a piece rate sum for the pay period that is at least equal to the
minimum wage for all hours worked, the hours don’t have to be separately parsed
out and remunerated.
To complicate matters in
this case, D’Arrigo didn’t keep records of time worked, so there was no
accurate evidence of how many travel and waiting time hours the employees put
in each week. The court thus relied on the workers’ estimate of approximately
two hours per day of travel and waiting time. Based on this estimate, the court
ruled, D’Arrigo’s payments were insufficient. The company’s practice of paying
the piece rate or a guaranteed hourly minimum that didn’t count travel or
waiting time meant that there were at least some instances when employees
weren’t compensated for their travel and waiting time.
Big Settlement
The court’s ruling was
handed down in 2004. And now, D’Arrigo and the workers have finally entered into
a $3.5 million settlement for the unpaid wages. The settlement covers
approximately 3,000 workers, who will receive average payments of $2,300.
Pointers
Here are three points to
keep in mind based on this case:
1. Keep accurate
records. D’Arrigo’s
failure to keep records for the travel and waiting time not only violated the
law but also deprived it of the opportunity to establish the actual amount of
such time.
2. Pay at least the
minimum wage for all hours worked. As the court made clear, whether payment is made
on a piece rate method or is based on hours worked, the remuneration must be no
less than a sum equal to the minimum wage for all hours worked, counting
mandatory travel and waiting time.
3. Include mandatory
travel time and waiting time as hours worked. Whether employees are entitled
to compensation for travel time on employer-provided transportation depends on
whether they’re subject to the employer’s control during that period. If they
are, the time counts as hours worked. If employees are free to choose—rather
than required—to ride their employer’s buses to and from work, time on the bus
isn’t hours worked. If employer transportation to the worksite is mandatory,
you will have to pay employees for the actual travel time and time spent waiting
for the transportation to arrive after the designated time employees are
required to be at the assembly spot. Further, when employees have to remain on the
job at the end of the day to complete paperwork, prepare tools or machinery for
the next day, or to wait for the company bus to transport them from the
worksite, that time also counts as hours worked.
_
1 Medrano v. D’Arrigo
Brothers Company of
U.S.D.C. (N.D. Cal.) No. C00-20826 JF (RS), 2006