Key Points

  • The Second Circuit held that waiting time is compensable under the Fair Labor Standards Act when an employer requires an employee to report at a set time ready to work and, for reasons beyond the employee's control, there is no work to be done.
  • The majority grounded the holding in 29 C.F.R. § 790.7(h) and the Supreme Court's discussion of it in IBP v. Alvarez, and rejected Lidl's argument that Integrity Staffing Solutions v. Busk abrogated the regulation.
  • The court refused to affirm on the alternative ground that 15 minutes of unpaid time a week is de minimis as a matter of law.
  • Judge Sullivan dissented, arguing that the pre-shift wait fails the integral-and-indispensable test and that the engaged-to-wait regulation fits on-call workers, not grocery clerks.
  • The court vacated the dismissal of the federal and New York time-shaving claims and remanded to the Eastern District of New York.

A divided federal appeals court on Tuesday revived a former Lidl grocery clerk's lawsuit seeking pay for the mornings she spent outside a locked store waiting for a manager with the keys. The court held that federal wage law requires pay for waiting time when an employer orders workers to arrive early, ready to work, and they cannot start for reasons beyond their control.

The U.S. Court of Appeals for the Second Circuit ruled 2-1 for Sandra Santos, who worked as a clerk and stocker at two Lidl stores in West Babylon, New York. Circuit Judge Robinson wrote for the majority, joined by U.S. District Judge Jed S. Rakoff of the Southern District of New York. Circuit Judge Richard J. Sullivan dissented.

The decision vacated a judgment by U.S. District Judge Azrack of the Eastern District of New York, who had dismissed the claims under the Portal-to-Portal Act. That 1947 law generally shields employers from liability under the Fair Labor Standards Act, the federal minimum-wage and overtime statute, for time workers spend on activities "preliminary" or "postliminary" to their principal work. The panel held that the law does not bar Santos's claims at the pleading stage.

According to the complaint, Santos worked a 10-hour opening shift from 5 a.m. to 3 p.m., four days a week, at $16.50 an hour, from about July 2021 to November 2021. Lidl required her and other opening-shift employees to report 15 minutes before the listed start time. The time clocks were inside the stores, and employees could not clock in until an opening manager unlocked the doors.

Santos alleged that her managers arrived late about once a week, leaving her with 15 minutes of unpaid wages each week, and that for five of those weeks the unpaid time was payable as overtime. She sued Lidl for unlawful "time-shaving," or failing to pay for compensable time, under the federal statute and the New York Labor Law. She seeks to represent other opening-shift employees.

Lidl argued that the wait was not compensable because Santos could use the time for her own purposes, such as reading the news or paying bills online, or could leave the parking lot. The company also argued that Integrity Staffing Solutions, Inc. v. Busk, a 2014 Supreme Court decision holding that warehouse workers' time in end-of-shift anti-theft screenings was not compensable, abrogated the Labor Department regulation on which Santos relied.

The majority grounded its holding in that regulation, 29 C.F.R. § 790.7(h). The regulation distinguishes a worker who arrives early by choice from one whose employer requires a report at a set hour, only for the worker to find no work available. "The difference in the two situations is that in the second the employee was engaged to wait while in the first the employee waited to be engaged," the regulation states.

Judge Robinson also relied on IBP, Inc. v. Alvarez, a 2005 Supreme Court case about meat production workers who waited to put on protective gear. The Supreme Court held that their wait was not compensable but said its "analysis would be different" if the employer "required its employees to arrive at a particular time in order to begin waiting."

The majority read Busk as holding that an employer's requirement, standing alone, does not convert a preliminary activity into paid work. "But Busk doesn't address the distinct scenario of a worker engaged to wait," Judge Robinson wrote. The majority quoted a 1944 Supreme Court decision about on-call firefighters: "Readiness to serve may be hired, quite as much as service itself."

Lidl had also argued that the engaged-to-wait principle covers only traditional on-call workers such as firefighters and limousine drivers. "But we see no such limit in the text of § 790.7(h)," the majority wrote. The court added that the Supreme Court had contemplated applying the regulation to meat production employees, "a far cry from traditional on-call employees."

The panel also refused Lidl's alternative request to affirm on the ground that the claim was de minimis, a doctrine that excuses employers from paying for trivial periods of time that cannot practically be recorded. "We cannot conclude from our precedents that fifteen minutes of uncompensated work time a week is de minimis," the majority wrote. The court cited a 1953 Second Circuit decision that rejected a de minimis finding for unpaid wages of less than $1.00 a week.

Judge Sullivan wrote that the majority required Lidl to pay Santos for time spent "waiting in her car before the start of her shift." "Because that outcome contravenes the text of the Portal-to-Portal Act and binding Supreme Court precedent, I respectfully dissent," Judge Sullivan wrote.

The dissent applied the "integral and indispensable" test, under which a pre-shift activity is compensable only if it is an intrinsic element of the employee's principal work and one the employee cannot dispense with. Judge Sullivan wrote that Santos "could have foregone the wait" without impairing her core tasks of stocking shelves and helping customers. The majority, Judge Sullivan wrote, "seizes on language in a Department of Labor regulation" to avoid that test.

Judge Sullivan read the regulation as applying most plausibly to on-call workers such as firefighters and security personnel. "Santos's brief, pre-shift wait, by contrast, in no way resembled being on call," the dissent stated. Judge Sullivan also argued that her waiting was a routine part of her preliminary activities rather than an aberration from them.

The majority responded in a footnote that Santos alleged forced waiting only about once a week. "The days when she was forced to wait to begin performing her regular duties were an aberration," the majority wrote.

The court assumed without deciding that the state and federal time-shaving claims rise and fall together, as both parties had treated them.

Lawyers for Santos included C.K. Lee of Lee Litigation Group, PLLC. Lidl was represented by Jason D. Burns of Greenberg Traurig, LLP.

The panel remanded the federal and state time-shaving claims to the Eastern District of New York for further proceedings consistent with the opinion.