Originally published in CCJ on February 25, 2020. Republished with permission. All rights reserved.
This is the first piece in a three-part series on how fleets can protect themselves against wage and hour law claims brought by private or government-backed litigation. Part 2 and Part 3 available now.
In January, the U.S. Court of Appeals for the 9th Circuit upheld a $54.6 million judgment against Walmart and its private truck fleet for violations of California’s state minimum wage laws. In its formal opinion, the court emphasized that the language of Walmart’s policies, as written in its driver pay manuals, was a deciding factor in the ruling.
In other words, the court did not focus on the testimony Walmart or the drivers presented about actual practice – it came down to the language in Walmart’s driver manual.
The order is a stark reminder for fleets: Check your employee manuals and ensure they comply with minimum wage laws.
Courts regularly look to the language of company handbooks and manuals when determining whether policies and procedures conform with – or violate – state and federal law. Overlooking the details, or failing to review and update regularly, can be a costly mistake.
For example, are your independent contractor and owner-operator handbooks identical to your employee handbooks? This is a risky practice that could expose you to misclassification claims. Instead, ensure you have separate policies that address the unique distinctions between your employees and contracted drivers.
Are there provisions in your driver manuals that instruct or limit how drivers may spend downtime? If so, this language should be reviewed to safeguard your company from potential heightened liability and to confirm consistency with pay practices.
The 9th Circuit held that Walmart must compensate drivers for time spent on layovers because the language contained in Walmart’s policies about layovers was sufficient proof that Walmart “exercised control” over the drivers during those breaks.
For example, Walmart’s driver manuals stated a break may be taken at home “[o]nly after receiving approval from a member of Transportation management” and that an “[u]nauthorized break at home” is “unacceptable and may lead to immediate termination.”
The court held that even while the “employees may have been free to leave the truck and engage in personal activities during layovers” the language of the policy “restricted drivers’ freedom of movement and prevented drivers from making a unilateral decision to spend layovers at home without preapproval,” thus making the downtime compensable. Walmart had not been paying for this downtime, and after factoring in the additional hours, the court found that Walmart was in violation of California’s minimum wage law.
The decision highlighted that Walmart erred in including language in its policy that was overreaching and inconsistent with its own practices. Now, think about your own driver manuals or employee handbooks. Are you so confident in them that you would bet the outcome of a class-action lawsuit on their language as currently written? Probably not.
Litigation of wage and hour claims is on the rise across the country, and companies should anticipate that their corporate policies will be under the microscope of the court system if they are ever sued for a wage and hour violation.
It is imperative that you are regularly reviewing your employee handbooks and driver manuals for compliance and accuracy. You should also ensure you are diligent in distributing and collecting acknowledgment forms from employees and drivers. Not only will this help prevent your own policies from being used against you, but it will also support your own defense in these sorts of claims.
Taylor and Associates is a full-service transportation law firm assisting clients to meet their federal and state compliance requirements. If you have questions about this or other issues, contact us.
Co-authors: Elena Adang & Lesley Sachs