(Story by Lydia Dishman originally appeared in Fast Company)
There are many surprising ways that employees can charge their workers for every second of the day, bit it will hurt them in the long run.
Last week, 6,000 workers of a Pennsylvania company achieved a small victory. A federal judge ruled that their employer, American Future Systems Inc., has to pay up for making them clock out for bathroom breaks.
The company will have to put out about $1.75 million in back pay and damages for forcing employees to clock out at offices in Pennsylvania, New Jersey, and Ohio between July 2009 and July 2013, according to a report by the Philadelphia Inquirer.
But surprisingly, making employees clock out to pee is technically legal. The Fair Labor Standards Act (FLSA) doesn’t require companies to pay for breaks that are under 20 minutes. Back in 2009, American Future Systems issued a written policy declaring that workers could take breaks “at any time,” but those breaks wouldn’t be paid, and cited the FLSA in its defense in the suit.
Many of the company’s employees are telemarketers who offer subscriptions to the company’s 20 newsletters that include titles such as Keeping Up to Date on Payroll. Employees are paid an hourly rate of $7.25 and a bonus based on sales. In 2012, the Labor Department filed a lawsuit, saying the company violated the FLSA because employees couldn’t earn the minimum wage of $7.25 per hour if they had to clock out every time they had to go to the toilet or get a drink.
But this is not an obscure case of employers nickel and diming their workers for every minute of their time. Other well-known companies have been sued for docking employees for breaks or other brief time spent at work not working.
For instance, a class action suit against CVS is pending a decision in 2016. The case involves hourly call center workers who put in more than 40 hours per week doing various tasks prior to signing on to the phone system, such as booting the computer programs and logging in, initializing and accessing customer interfaces and portal systems, and checking alerts and emails directly related to their jobs. Even though they were clocked in, the employees say they were not paid the requisite overtime, adding up to thousands of dollars per year, per employee.
Although there hasn’t been a class action suit brought against a company for this yet, it’s worth pointing out that with more women than ever in the workplace —especially as heads of households with children— the FLSA doesn’t totally protect new mothers if they take time to pump at work. The employer is required to provide break time up to one year after the child’s birth, but they are not required to pay the employees for these necessary short breaks, and a company with less than 50 employees doesn’t have to allow even unpaid time to pump at work—an act that for nursing mothers is as physically essential as going to the bathroom.
Unfortunately, while the employees of American Future Systems may have won this battle, the Supreme Court recently ruled in favor of other major companies that are refusing to pay for time spent on the job even when it’s a required action by their employer.
CNET reported that a unanimous ruling overturned a previous lower court decision requiring Amazon to pay workers for time they spent in security check lines because it was considered part of their job and ultimately benefitted Amazon. Some warehouse contract employees reported that they had to wait up to 25 minutes as security checked pockets and purses to make sure no merchandise was stolen.
And the class action lawsuit brought against Apple by its retail store employees demanding to be paid for time spent in bag checks at stores was dismissed in November.
HOW PINCHING PENNIES HURTS THE BOTTOM LINE
Companies who treat their (usually low-wage) workers this way can expect to see more losses in higher turnover in the long run, even if they get away with charging them for every minute not working. Mark Thierman, the lawyer representing the former Amazon employees, said the decision was “disappointing” and “bad for working men and women,” according to the CNET report. And Ivette Vigano, assistant director of the Labor Department’s Wage and Hour Division office in Philadelphia, told the Inquirer that treating minimum wage employees this way causes “very high turnover” among these vulnerable workers. “Most of them aren’t kids. They are mature adults. For them not to be able to take a brief break to relieve themselves, to speak bluntly, it’s very sad,” she said.
Organizational psychologist Laura Hamill, PhD, says that these rulings aren’t just bad for workers, they’re bad for business. As chief people officer of Limeade, a corporate wellness technology company, Hamill says that creating a workplace culture that’s aligned with business goals is a secret for success. “It all starts with fundamentally valuing people,” she tells Fast Company. “A culture that doesn’t value people can quickly become toxic and will lead to weaker business results over time.”
Proprietary research from Limeade indicates that when an employee feels their employer cares about their well-being, they are 38% more engaged at work, 17% more likely to stay on for more than a year, and 10 times less likely to be hostile.
Other research from the University of East Anglia found that employees with a supportive work environment were more satisfied with their jobs and were healthier. Even when they weren’t feeling 100%, they were motivated to go to work.
And it doesn’t have to cost employers more to treat their workers well. According to MIT professor Zeynep Ton, highly successful retail chains such as QuikTrip, Trader Joe’s, and Costco “not only invest heavily in store employees, but also have the lowest prices in their industries, solid financial performance, and better customer service than their competitors.” As Ton wrote in Harvard Business Review, “They have demonstrated that, even in the lowest-price segment of retail, bad jobs are not a cost-driven necessity, but a choice.”
Hamill agrees. “What matters most to employees are the day-to-day interactions, how they’re treated and how they’re valued,” she says. Maximizing the output of people without really valuing them is shortsighted and isn’t sustainable. “Why would employees go above and beyond to do an excellent job if they don’t feel valued by their employer?” Hamill posits.
Hamill says employers need to show their staff they matter in two ways. “Locally, for employees it means their manager, their team, their social networks, and their physical work environment,” she explains, “Organization-wide support for employees means strategic alignment, leadership, well-being focus, and culture.”