DLSE ISSUES NEW OPINION
ON TRAVELING OUT OF TOWN ON BUSINESS
By
Richard J. Simmons
Partner
Sheppard, Mullin, Richter & Hampton LLP
The state and federal wage and hour laws require that all nonexempt employees be paid for their "hours worked." However, the state and federal standards have long differed in their approach to determining how overnight business trips must be compensated. The subject is addressed in Chapter 7 of the Wage and Hour Manual for California Employers, Tenth Edition, by Attorney Richard J. Simmons of the law firm of Sheppard, Mullin, Richter & Hampton, LLP.
On February 15, 2002, the California Division of Labor Standards Enforcement ("DLSE") issued an advice letter on the subject. It responded to a question posed by an employee as to whether compensation was required "for time spent traveling to and from an out-of-town, overnight business trip in connection with a training class" that the employer required the employee to attend. The facts and conclusions are summarized below.
1. Background
The employee represented that he was a nonexempt employee who worked in California and was required to attend training classes in San Antonio, Texas. The classes were held during normal work hours on Monday and Tuesday. All of the travel took place outside the employee's normal work hours of Monday to Friday, 9:00 a.m. to 5:30 p.m. The employee traveled from California to Texas on the preceding Saturday, from 11:15 p.m. to 6:30 p.m. pacific daylight time. He spent Sunday sightseeing in San Antonio, and returned from Texas to California at the conclusion of the training on Tuesday evening, from 6:00 p.m. to 1:00 a.m. (Wednesday morning) central daylight time. On the trip to Texas, the employee spent a half hour eating lunch, and on the return trip spent a half hour eating dinner. The travel plans were approved by the supervisor.
The employer maintained a staff manual that provided, "time spent traveling as a passenger on a plane, train, bus, car, or taxi cab to a business destination outside your normal business hours is not considered to be paid time." The employee sought an opinion as to whether the company policy conformed with California law.
The DLSE concluded that the policy violates California law in that the time spent traveling to and from a business meeting or other event where attendance was required by the employer constitutes hours worked, whether or not the travel takes place during regular work hours, and whether or not the business trip includes an overnight stay. The DLSE acknowledged that the conclusion would be answered differently under federal law.
2. The State Enforcement Policy
The DLSE opinion explained that state wage and hour law differs in many respects from federal law. This includes the extent to which various activities are treated as "hours worked" under state law.
a. The Subject-To-The-Control Test
The opinion relied, in part, on the California Supreme Court's decision in Morillion v. Royal Packing Co., 22 Cal. 4th 575 (2000), and the definition of "hours worked" in the Wage Orders of the Industrial Welfare Commission ("IWC"). The term "hours worked" is defined to include "the time during which an employee is subject to the control of an employer" and "all the time the employee is suffered or permitted to work, whether or not required to do so." The opinion concluded that "compulsory travel time constitutes time during which the employee is 'subject to the control of an employer' and thus constitutes compensable 'hours worked,' whether or not the employees are free to read a newspaper or engage in other personal pursuits while riding in a bus as passengers."
b. Overnight vs. All-In-A-Day Travel
The opinion also noted that state law does not distinguish between hours worked during "normal" working hours and hours worked outside "normal" working hours. Nor does it distinguish between hours worked in connection with an overnight, out-of-town assignment or hours worked in connection with a one-day out-of-town assignment. Such distinctions under the federal regulations were found inconsistent with state law. The opinion contained the following passage:
c. Employers Can Pay a Different Rate of Compensation"Under state law, if an employer requires an employee to attend an out-of-town business meeting, training session, or any other event, the employer cannot disclaim an obligation to pay for the employee's time in getting to and from the location of that event. Time spent driving, or as a passenger on an airplane, train, bus, taxi cab or car, or other mode of transport, in traveling to and from this out-of-town event, and time spent waiting to purchase a ticket, check baggage, or get on board, is, under such circumstances, time spent carrying out the employer's directives, and thus, can only be characterized as time in which the employee is subject to the employer's control: Such compelled travel time therefore constitutes compensable 'hours worked.' On the other hand, time spent taking a break from travel in order to eat a meal, sleep, or engage in purely personal pursuits not connected with traveling or making necessary travel connections (such as, for example, spending an extra day in a city before the start or following the conclusion of a conference in order to sightsee), is not compensable."
The opinion explained that employers can establish different rates of pay for travel time and for other types of work. It noted that the rate at which time spent traveling must be paid depends upon the nature of the compensation agreement. If the employer has agreed to pay a fixed hourly rate of pay for any work performed, the travel time must be paid at that regular hourly rate, or, if applicable, the required overtime rate based upon that regular rate. In contrast, an "employer can establish a separate rate for travel before the work is performed, provided that no rate of pay can fall below the state minimum wage."
© 2002 Richard J. Simmons. All Rights Reserved.