On Oct. 8, 2021, the Tenth Circuit Court of Appeals (which governs federal cases in Utah, Oklahoma, Kansas, New Mexico, Colorado and Wyoming) determined that employees at a call center had been underpaid by approximately 48 cents per shift under the Fair Labor Standards Act because they were not paid for the time expended booting up their computers and logging into the time system. Peterson v. Nelnet Diversified Sols., LLC, 15 F.4th 1033 (10th Cir. 2021).

Nelnet Diversified Solutions is a student-loan company with call centers in Colorado and Nebraska. From those call centers, Nelnet’s employees “service student loans and interact with debtors over the phone and through email.” The employees worked from in-office computers as part of their routine work activities. They also could not perform their job without accessing the software on the computer, as they needed information on the software to service the student loans and communicate with the debtors, which was the purpose of their job.

Significantly, the employees also had to sign into their computers before they could clock into the employer’s time-keeping system. As a result, the employees were spending approximately two minutes of uncompensated time per shift waiting for their computers to start up. 

The Court ruled that the employer had to retroactively pay its employees for this uncompensated time. The decision was based on two main findings: First, logging into the computer was an “integral and indispensable” part of the employees’ primary work. Second, the uncompensated time was not so minimal that the employer should be excused from compensating the employees for it.

As to the first finding, the Court emphasized that it does not matter that the employees exerted no meaningful physical or mental effort to log into their computer. The only relevant question was whether “the time devoted to preparing the computers for performance was . . . integral and indispensable” to the work the employee was hired to perform. The Court also rejected the employer’s argument that logging into the computer was part of the employee’s commute—which would make it non-compensable under the Portal-to-Portal Act:

As the [employees] point out, they still travel to and from work in the traditional way; such travel time, of course, is not compensable. And that commute time does not somehow morph into the digital realm and continue until the moment that [an employee] successfully clocks in at his or her computer. Likewise, turning on a computer, entering passwords, and launching software is not analogous to waiting in line to punch a clock, particularly when—very much unlike a time clock—the computer itself is an integral tool for the work the individual is employed to perform.

As to the second finding, the Court used a three-factor balancing test, concluding that the uncompensated time was large enough that the employer needed to provide backpay to the employees. Specifically, the Court concluded that (a) the practical administrative burden of calculating the uncompensated time was low—as demonstrated from the fact that the employer could readily estimate how much time it took to login to their system and the fact that the employer’s experts were able to calculate with reasonable certainty how long it took to login; (b) the $0.48 lost by an employee was not insignificant—especially considering that would add up to $500 for employees who had been with the employer for the entire relevant time and given that the employees were “low-wage workers” who were paid only $13.50 an hour; and (c) the employees “regularly engage[d] in the activities at issue.” Balancing these factors, the Court ruled that employer must pay its employees for the uncompensated time.

Although the Court’s ruling has significant ramifications to employers in every field, especially where their employees use a computer as a regular part of their job, the Court provided some limiting parameters. For example, the Court expressly declined to rule on whether employers would have to pay an employee who works from home for the time it takes to start their computer. Similarly, the Court stressed that the “employees have no ability to impact the amount of time it takes to boot up their computers and software.” So, an employee likely would not need to be compensated for intentional delays in beginning their workday after arriving at their workspace. Finally, the Court noted that “the integral-and-indispensable inquiry applies on a case-by-case basis, and the result of that inquiry depends entirely on the work an individual is employed to perform.” Thus, employees outside of the loan-servicing field may be able to distinguish themselves from the facts in Nelnet.

To discuss this or other related employment issues, contact Christina Jepson by calling (801) 532-1234 or send an email to cjepson@parosnsbehle.com or Aaron Worthen by calling (208) 562-4900 or send an email to aworthen@parsonsbehle.com.