EMPLOYER’S CATCH A BRAKE – COMMUTE TIME IN EMPLOYER VEHICLES STILL NOT COMPENSABLE IN CALIFORNIA…MAYBE

If only I could be paid for my commute.  See, I live in the South Bay (the Southern California version) and commute to downtown Los Angeles along the 405, 105 and 110 freeways.  It's neither quick, nor particularly attractive.  (I save a little time in my Natural Gas Honda Civic, which gets me in the carpool lane, but not nearly as much as I did P.H. (pre-hybrid).  Now that those pesky Prius’ are allowed in the carpool lanes, I often go no faster than the carbon monoxide spewing Hummers two lanes over.)

So imagine if I could get paid for commuting.  I’d be rich!... and wouldn’t need to commute to work anymore.  Think of the incentives in car-happy California?  I might even want to drive in the slow lanes (which is redundant, especially during “rush hour,” which isn’t an hour and no one rushes.)

But getting paid to sit in morning gridlock listening to NPR (fine, Mark & Brian) would be wrong, wouldn’t it?

Mike Rutti decided to find out (or perhaps his attorney did).  Rutti v. Lojack Corp. is the result.

COMMUTING IN THE COMPANY CAR

Rutti was a Lojack technician who drove his employer-issued van to and from various job locations to install vehicle alarm systems. 

As many employers do when giving their employees vehicles, Lojack had certain restrictions on the use of Rutti’s van – e.g., the employee must drive directly from home to the first job location, and from the last job location to home, without making any personal stops (like dropping the kids off at school, or picking up the surf board) or carrying any passengers.  He also had to keep his cell phone on and take job-related calls, if any.

To support his claim for commute pay, Rutti claimed he had to drive the company van, he didn’t voluntarily agree to this arrangement, and hence he should be compensated for doing what his employer made him do. 

FEDERAL LAW:  EMPLOYEE COMMUTING FLEXIBILITY ACT

The Ninth Circuit was not impressed.  In Rutti v. Lojack Corp., the Court looked first at the Employee Commuting Flexibility Act (“ECFA”) (yes, there is such a thing, but who came up with the title?  It’s an amendment to the nicely titled Portal to Portal Act, and is codified at 29 U.S.C. § 254(a)).  The Court explained that under federal law, employers generally need not compensate employees for:

“walking, riding, or traveling to and from the actual place of performance of the principal activity or activities which such employee is employed to perform.”

(FYI, they didn’t mention skateboarding.  I’m just saying….)

However, the rule is a little different when the employer provides the vehicle and requires the employee to use it.  (Employers may want to pay attention to this part.) 

“[T]he use of an employer’s vehicle for travel by an employee … shall not be considered part of the employee’s principal activities if the use of such vehicle for travel is within the normal commuting area for the employer’s business or establishment and the use of the employer’s vehicle is subject to an agreement on the part of the employer and the employee or representative of such employee.”

In other words, commute time in company vehicles is not “considered part of the employee’s principal activities,” and hence not compensable, so long as it is subject to an agreement between employer and employee.  If the employee voluntarily agrees to utilize the company vehicle, bundled with whatever restrictions and conditions that come with it, as a condition of his job, then he can’t expect his commute to be considered “mandatory company business” or “part of the employee’s principal activities” such as to be compensable.

What kind of agreement?  The statute doesn’t specify.  However the Ninth Circuit clarified that the employment agreement itself would be sufficient – the employee’s voluntary acceptance of the job, which included the company vehicle policy, was sufficient “agreement” by the employee to accept the company vehicle and its mandatory commute obligations without considering the commute to be a compensable activity.

Now, if the employee conducts “legally cognizable work” during the commute, and this work is not de minimis (Latin for “itty bitty”), then we have a different story (and the Court spent a lot of words on explaining what "itty bitty" means in this context).  But the Ninth Circuit explained that a few restrictions, such as don’t pick up scary hitchhikers with chain saws or text while driving, do not transform an otherwise non-compensable commute into “legally cognizable work.” 

CALIFORNIA LAW - IS IT ANY DIFFERENT?  (OF COURSE IT IS!)

But what about California law?  As we all know, just because an employment practice may be lawful under federal law, does not mean that California sees things the same way.  (See just about every California employment law.)  Couldn’t California law take a more restrictive view of the daily commute and consider the restrictions and obligations imposed on Mr. Rutti’s commuting activities by his employer to require compensation?

California could.  And it does.  But not so much as to require payment of Mr. Rutti’s drive time.  At least not according to the Ninth Circuit (which, I must warn you, does not always predict California law with 100% accuracy, as we have seen in the non-compete world).

Rutti argued that forced commute time is compensable under the principle espoused in Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000).  In Morillion, employees were required to meet at a “departure point,” wait for a company bus, and then get bussed to the work location.  The employees could not take their personal cars beyond the departure point. 

The California court in Morillion said the commute from home to the departure spot was not compensable, but the “compulsory travel time, which includes the time they spent waiting for [the employer’s] buses to begin transporting them, was compensable.”  (See also California Labor Code § 510(b) which holds that commute time in a company vehicle is not “part of a day’s work” when it is used “for the purpose of ridesharing.”)

This didn’t help Mr. Rutti, since the Ninth Circuit considered his commute to be more akin to the non-compensable portion of the Morillion commute.  However, the Ninth Circuit did concede that “this is a close issue.”  (Pg. 11465, n. 7.) 

In fact, it was so close, that Judge Silverman dissented, and argued that California law did obligate payment of the commute time since Mr. Rutti was under the employer’s control:

“Rutti was required to drive the company vehicle, could not stop off for personal errands, could not take passengers, was required to drive the vehicle directly from home to his job and back, and could not use his cell phone while driving except that he had to keep his phone on to answer calls from the company dispatcher.  There is simply no denying that Rutti was under Lojack’s control while driving the Lojack vehicle en route to the first Lojack job.”

(There is more to the Rutti case involving off-the-clock work, but I’ll leave that to other bloggers, like Scott Leviant's nice The Complex Litigator.)

If the Ninth Circuit sees it as a close issue, will a California court see it differently?

I'M NO ECONOMIST, BUT SPITZER IS

I’m no economist, but in the end, isn’t this an economic question?  (See, Matt Spitzer, I wasn’t totally asleep in your torts class.)  If employers are required to pay for their employees’ commute time, they don’t have that many options, do they?  They can (a) charge more for their product or services to raise the money to pay for their employees to listen to NPR in the car; or (b) they can absorb the extra costs and take it out of their own profit margin (ouch); or (c) they can reduce the hourly pay of their employees so they make the same amount of money per day, but it gets spread out to include the drive time.  Under (c), the employee gets compensated for more hours, but does not get more total compensation.

Option (c) would also impact the number of hours employees would be “on the clock,” which would impact how much work they can do before overtime kicks in, which would impact how much overtime gets paid…but now my head just plain hurts.  I’ll leave that to Spitzer and his buddies at Edgeworth Economics.