Unpaid Waiting Time and the FLSA: Why Mandatory Pre-Shift Reporting Can Create Significant Legal Liabilities
Payroll departments typically rely on the precise data logged by time-tracking systems to calculate employee compensation, but a recent legal development serves as a stark reminder that the duty to pay often begins long before an employee clocks in. A wage dispute involving Lidl US, LLC, recently reached the Second Circuit Court of Appeals, highlighting the critical distinction between "waiting to be engaged" and being "engaged to wait." The appellate court’s decision to remand the case for further proceedings underscores the potential for massive liability when employers mandate early arrival without providing a functional way for workers to record their time.
The case, Santos v. Lidl US, LLC, centers on the allegations of Sandra Santos, a former employee who worked opening shifts at a Lidl location in New York in 2021. According to court filings, Santos and her opening crew were strictly required by management to arrive at the store by 4:45 a.m. for a 5:00 a.m. shift. However, the operational reality of the workplace often interfered with the employees’ ability to commence their duties. Santos alleged that on approximately one morning each week, the manager responsible for opening the store failed to arrive on time. Consequently, the opening crew was forced to wait outside the locked facility until the manager arrived at or after 5:00 a.m.
During these intervals, the employees were physically present at the worksite as directed by their employer, yet they remained unable to access the time-clock system to record their start time. Santos contended that because this waiting period was a mandatory requirement of her employment—not a voluntary early arrival—it constituted compensable working time under the Fair Labor Standards Act (FLSA) and New York state labor laws. The litigation gained traction when the district court initially dismissed the complaint, characterizing the time as de minimis or non-compensable pre-shift activity. The Second Circuit’s decision to revive the claim signals a broader judicial recognition of the "engaged to wait" doctrine.
The Legal Distinction: Engaged to Wait vs. Waiting to Be Engaged
At the heart of this dispute is a foundational concept in federal wage-and-hour law. The Department of Labor (DOL) has long distinguished between two types of waiting periods. The first, "waiting to be engaged," applies to employees who arrive early for their own convenience or personal preference. In these scenarios, the employee is free to use that time for personal pursuits, and the employer generally has no obligation to provide compensation.
The second category, "engaged to wait," occurs when an employee is required to report to a specific location at a specific time and is subsequently forced to wait for tasks to begin due to circumstances beyond their control. Under the FLSA, if an employee is effectively tethered to the workplace and restricted in their movements because the employer has mandated their presence, that time is considered "hours worked." The Second Circuit’s ruling emphasizes that if an employer sets an arrival time, they must ensure the mechanisms for clocking in are available. If those mechanisms are unavailable due to a manager’s tardiness or a system failure, the burden of that time falls on the employer, not the employee.
Chronology of the Dispute
The timeline of the Santos case reflects the typical progression of high-stakes wage litigation. In 2021, the plaintiff worked as a store associate, an hourly role subject to strict shift scheduling. The specific grievance involves recurring instances throughout that year where the opening manager was delayed. By early 2022, the legal challenge was formalized as a class-action or individual wage suit, alleging that the unpaid 15-minute increments accumulated over time, and in five specific weeks, resulted in unpaid overtime premiums.
When the district court granted the initial motion to dismiss, it relied on the argument that the time was too inconsequential to warrant legal intervention. However, the Second Circuit’s October 2026 decision rejected the "de minimis" defense at the pleading stage. By remanding the case, the appellate court has sent a clear message: 15 minutes of labor, when aggregated across a workforce and repeated weekly, represents a substantive wage theft claim that must be adjudicated on its merits.
Economic and Operational Implications
The implications for retail and service industries are significant. Many companies operate with high-pressure, "just-in-time" staffing models where opening procedures are time-sensitive. If managers require employees to arrive early to ensure the store is ready for a 5:00 a.m. opening, but fail to account for potential administrative delays, they risk systematic violations of the FLSA.
Data from the Department of Labor suggests that "off-the-clock" work remains one of the most common categories of wage-and-hour violations. These claims are particularly dangerous for employers because they often involve large classes of workers. If a single store experiences these delays, the liability can be contained. However, if a company-wide policy or a lack of clear training leads to similar practices across dozens of locations, the resulting back-pay, interest, and liquidated damages can quickly reach into the millions of dollars.
Furthermore, the integration of digital time-tracking has not necessarily simplified these issues. While biometric scanners and mobile apps have improved accuracy, they have also created "technical" barriers. If an app fails to sync or a biometric scanner is offline, and an employee is told they cannot enter the facility until a supervisor arrives, the legal risk remains identical to the traditional punch-clock era.
Best Practices for Payroll and HR Compliance
To mitigate the risks highlighted by the Santos ruling, human resources departments and operational managers should consider several proactive strategies:
- Audit Opening Procedures: Management should evaluate whether store opening policies require employees to be on-site before they can realistically clock in. If early arrival is required, the time-tracking system must be accessible immediately upon arrival.
- Standardize Manager Training: The root cause of the Santos case was managerial tardiness. Training programs should emphasize that a manager’s failure to open a store on time does not excuse the company from its obligation to pay for the time employees spent waiting under orders.
- Formalize "Waiting" Protocols: If an unexpected delay occurs—such as a power outage or a manager’s emergency—employees should be instructed on how to record that time manually. Payroll systems should have a clear, audit-ready mechanism to "add" time for instances where the digital clock was unavailable.
- Monitor "De Minimis" Claims: While federal law does allow for the exclusion of very small, infrequent amounts of time, relying on this as a defense is a high-risk strategy. The Second Circuit has made it clear that courts are increasingly skeptical of using the "de minimis" rule to dismiss systemic wage issues.
- Implement Self-Audits: Periodic reviews of payroll data against store schedules can identify patterns of unpaid pre-shift time. If employees consistently punch in at 5:15 a.m. for a 5:00 a.m. shift, HR should investigate why the 15-minute gap exists and whether it represents unpaid work.
Conclusion
The case of Santos v. Lidl US, LLC is a reminder that labor law is as much about operational reality as it is about written policy. Employers who mandate employee presence are assuming a financial responsibility for that time, regardless of whether the employee is actively stocking shelves or simply waiting for a manager to unlock a door. As the case moves back to the district court for further proceedings, it will likely serve as a foundational precedent for how federal courts evaluate the intersection of mandatory arrival times and the technological limitations of modern timekeeping. For HR professionals, the lesson is clear: if you require it, you must pay for it. Ensuring that payroll practices reflect the reality of the front-line worker is the most effective way to avoid the cascading legal costs associated with wage-and-hour litigation.
