If you pay the monthly bill for your employee’s Blackberry, are you required to pay your employee for the time spent checking work-related emails and text messages? T-Mobile retail associates recently made headlines by challenging the mobile provider’s requirement that employees review their company-issued smart devices off the clock.

On Call, But Unpaid

Like many companies, T-Mobile USA Inc. required its employees to log hours through a computer-based timekeeping system, but did not track or compensate time employees spent responding to emails and text-messages on smart devices. The mobile phone company, which provides services to approximately 33 million wireless subscribers and over 800 wireless stores nationwide, is now facing a class action lawsuit under the federal Fair Labor Standards Act, as well as wage and labor claims under California and New York law.

Interestingly, several other lawsuits this year have drawn attention to the issue of what constitutes work in the era of instantaneous communication. Like T-Mobile, commercial real-estate company CB Richard Ellis Group Inc. is facing an employment lawsuit filed by former maintenance worker John Rulli, who seeks compensation for time spent receiving and responding to messages on his phone after hours. In Jose Gomez v. Lincare, Inc., medical equipment provider Lincare Inc. was sued for requiring its service representatives to spend evenings and weekends on call. The plaintiff employees in the Lincare case sought back pay for not only the time spent resolving consumer questions by phone, but also for the time spent on call and at overtime rates. In April 2009, the California state courts reinstated the suit in favor of the employees on appeal.

Old Law, New Rules

The Fair Labor Standards Act (FLSA) was enacted in 1938 and governs minimum wage, overtime pay, recordkeeping, and child labor regulations for full-time and part-time workers in the private sector, as well as in the government sector. Under the FLSA, employers must compensate qualified workers for time spent working during the week. In addition, for every hour worked over 40 in a work week, employees covered by the Act must receive time and a half overtime pay.

Not all workers qualify for FLSA protections; the statute specifies in detail employers who are exempt, such as certain companies with an annual gross business volume of less than $500,000. However, employers not covered by the FLSA may still be required to comply with the FLSA if their employees are engaged in interstate commerce or the production of goods for interstate commerce, such as employees who work in communication or transportation. The Department of Employment offers a web tool (http://www.dol.gov/elaws/esa/flsa/scope/screen9.asp) to help businesses ascertain whether FLSA provisions apply.

The broad definition of employment under section 3(g) the FLSA – “to suffer or permit to work” – covers work performed automatically by an employee who is aware of the obligation to perform the work. On-call time may overlap with on-the-clock time when the employee is bound to work obligations and is not free to use the time for his own purposes. As applied to mobile devices, these regulations may be construed to require compensation if the employee is called frequently, required to respond promptly or tethered geographically as a result of being on call. Thus, the recent cases filed against T-Mobile, CB Richard Ellis Group and Lincare may reframe the definition of work in the age of rapid-fire technology and hold broad implications for employers.

Even if an employee volunteers to be reachable in order to gain access to a company-subsidized smart device, the company may be obligated under the FLSA to provide compensation for on-call hours. Under Department of Labor regulations, an employer in some cases may not be required to provide compensation for work if the employee offers services freely and without pressure or coercion to a public agency for civic, charitable or humanitarian reasons. However, the Department of Labor issued a clarification of its policies in 2005, stating volunteers must be compensated for any time spent performing work that is similar to their normal duties, even if those activities occur during non-working hours.

Setting Boundaries To Mitigate The Risk of Liability

Employee wages, salaries, commissions and other related payments are the single largest expense for the plurality of small employers, according to a recent report from the National Federation of Independent Business. Payroll not only represents a significant cost for small businesses, but also poses an administrative burden that is complicated by the numerous state and federal regulations governing when and how an employee may be paid. Moreover, the intimate environment of a small business makes it easy to overlook the boundaries between on-the-clock and off-the-clock time.

These recent cases underscore the need for employers to enact clear policies defining exactly what it means for employees to be “on call”, even if employees express willingness to be reached via cell phone, text message or email. The Wage and Hour Division (Wage-Hour) of the Department of Employment administers and enforces the FLSA in government employment, as well as private employment. For up to two years after a violation of the FLSA (or three years in the cases of willful violation), Wage-Hour has the authority to bring action against an employer for the payment of back wages.

Likewise, employees like the retail associates in the T-Mobile case may directly file litigation to collect back pay, attorney’s fees and court costs. Once an employee has filed an action under the FLSA, the company is put on notice and must avoid taking actions against the employee that could be construed as retaliatory termination. Department of Employment regulations state that it is “violation to fire or discriminate against an employee for filing a complaint or for participating in a legal proceeding under FLSA.”

Corporate Blackberry and iPhone use can be a mixed blessing for both the employer and employee, even when the employee is at first eager to embrace the prospect of constant connectivity. Given the risks of costly litigation, it is important for a company to consider working with an employment law practitioner to draft clear employment policies regarding on-call time.

- By Dava Casoni, Annie Lin