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Walmart truck drivers find $54.6 million verdict right in the handbook

When evaluating alleged corporate misconduct, courts regularly look to the language of a company handbook when determining whether policies and procedures conform with (or violate) state and federal law. How confident are you in the text of your policy manual? Does your company handbook go too far? For example, does your company handbook limit how drivers may spend their downtime? If so, the policy should be reconsidered to avoid prospective liability.

Case in point, in January, the U.S. Court of Appeals for the Ninth Circuit upheld a $54.6 million judgment against Walmart, which maintains its own private truck fleet, for violating California’s state minimum wage laws. See, Ridgeway v. Walmart Inc., 946 F.3d 1066, 1077 (9th Cir. 2020). In Ridgeway, the Court considered the meaning of the relevant provisions in Wal-Mart’s pay manual. Specifically, it evaluated whether the written policies in Wal-Mart’s pay manual would amount to an exercise of control over drivers during layover periods if implemented as written. Ultimately, it concluded that Wal-Mart’s written policies constituted control as a matter of California law.

Assessing whether Walmart exercised control of its employees during layovers, the court stated that the question of control boiled down to whether the employee may use break or non-work time however he or she would like. Focusing on the text of the policy, it required drivers to gain pre-approval from management before taking a layover at home. The manual also required drivers to record the break at home and the approving manager on the trip sheet. Finally, drivers could be subject to disciplinary action, up to and including “immediate termination,” for taking an unauthorized layover at home.

The court found that Wal-Mart’s layover policy imposed constraints on employee movement such that employees could not travel freely and avail themselves of the full privileges of a break. For example, if Wal-Mart’s policies were applied as written, drivers may have been free to take a shower or go to a movie while on layovers, but drivers were not free, without receiving permission, to go home to see a pet, to eat a meal at their kitchen table, or to watch television in their own living room.

Wal-Mart argued that its policy did not amount to control under California law. It maintained that control occurs when employers erect prohibitions on employee conduct, not when employers impose additional burdens on employees. And, according to Wal-Mart, the policy simply required employees to ask permission to take a layover at home, it did not outright ban such conduct.

Nevertheless, the court reiterated that the key question was whether the employee may use the time spent on layovers for his or her own purposes, not whether the provisions are classified as prohibitions or burdens. If Wal-Mart’s policies directed, commanded, or restrained employee conduct, such that drivers were not free to spend layover time as they saw fit, then control existed.

The Ridgeway case serves to demonstrate the critical importance of accuracy in employee handbooks and policy manuals. When properly deployed, employee handbooks and policy manuals serve to demonstrate the employer’s commitment to complying with applicable law, serve as a reference, resolve disputes before they arise, ensure knowledge of rules and enhance workplace accountability. Your employee handbook can be your first line of defense if your company faces employment-based litigation. However, failure to adequately articulate company policies could be costly. Moreover, the manuals and handbooks should accurately reflect the company’s actual policies.

In recent years, we’ve seen driver classification wars and high stakes litigation involving wage and hour claims continue to gain momentum across the country. Consequently, long haul carriers should anticipate that the policies articulated in their handbooks and policy manuals will be the subject of intense scrutiny in the event that employment litigation ensues.

In conclusion, the court determined that Wal-Mart’s policies, applied as written, resulted in Wal-Mart exercising control over employees during mandated layovers. The consequence was a $55 million-dollar adverse verdict. It is vital that your handbooks and policy manuals be reviewed periodically to ensure that they accurately reflect your commitment to complying with the law. If you are less than certain whether your company’s policies fit within the ambit of what is permitted, you are encouraged to reach out to an expert to determine whether your policies would withstand judicial scrutiny. If you have questions regarding employee handbooks or policy manuals, please contact Benjamin Dill (bdill@setlifflaw.com) at 804-377-1272 or Steve Setliff at 804-377-1261 (ssetliff@setlifflaw.com).

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