Yesterday, the Department of Labor (DOL) Wage and Hour Division issued guidance on tracking teleworking hours for non-exempt employees. Reminding employers that the math is simple (an employer is required to pay employees for all hours worked, including remote work), the guidance also recognizes that it can be fudged.
The Fair Labor Standards Act (FLSA) requires employers to pay for work suffered or permitted, even if not requested or scheduled. As for work completed without the knowledge of the employer? Perhaps this work is compensable as well. If an employer “knows or has reason to believe that work is being performed, the time must be counted as hours worked.” In other words, the question is not: did the employer know? The question is: should the employer have known?
When faced with a wage and hour claim, Courts look to whether the employer should have acquired knowledge of hours worked through reasonable diligence. As the DOL suggests, citing Seventh Circuit precedent, employers can pin down even the most fluctuating of schedules by providing a “reasonable reporting procedure for non-scheduled time.”
How can employers avoid wage and hour liability, and what are specific issues remote employers should consider?
Develop a Reporting Procedure
To balance budgets and protect the company from liability, establish an easy to use, easy to understand reporting procedure for employees working off hours. The procedure will also alleviate the burden on you, as the employer, of cross-referencing schedules and calculating time. Per the DOL, though an “employer may have access to non-payroll records of employees’ activities, such as records showing employees accessing their work-issued electronic devices outside of reported hours, reasonable diligence generally does not require the employer to undertake impractical efforts such as sorting through this information to determine whether its employees worked hours beyond what they reported.” Where there is a reporting system in place, mere access to this data does not require you to mine for it.
Train Your Managers
Yes, I brought it up again. Policies are only as good as your people, so train your people to promote the policies. As the DOL warns, “… an employer’s time reporting process will not constitute reasonable diligence where the employer either prevents or discourages an employee from accurately reporting the time he or she has worked, and an employee may not waive his or her rights to compensation under the Act.” In other words, if your employees are encouraged, pressured, or threatened to reduce their hours, that reporting procedure you initiated will not be a strong defense.
Implement New Technology
How did you track hours before? If you need a change, there are a variety of timekeeping apps on the market. If you settle on a technology that uses fingerprint, handprint, iris scans, or other biometrics to log in, take care to understand laws related to biometric privacy in states like Illinois, Texas, and Washington.
Check Your States – Including the New Ones!
Do you know the minimum wage in your state? Your city? Of course you do. Do you know the minimum wage in the state your employee now resides after the pandemic resulted in a sudden move to be closer to family? Maybe not. Similarly, do you know the wage and hour rules in those states? Different states have different definitions of overtime, a variety of restrictions on how quickly and by what method paychecks are issued, etc.
Remember the Safe Harbor
Whether your employees are remote or not, employers who make improper deductions from salaried employees’ wages can lose their FLSA exemption. However, the DOL provides a “safe harbor” provision in the event that such deductions are not willfully made. Remote employers should ensure that this information is provided to employees, and that improper deductions are promptly reimbursed. The safe harbor provision must “clearly communicate” that the company prohibits improper deductions. The DOL states that a communication is clear if it is published in the employee handbook or the company intranet, and contains information on the method by which an employee may report a violation. If you have not circulated your policies since everyone walked out the door, now is the time.
 Allen v. City of Chicago, 865 F.3d 936, 945 (7th Cir. 2017), cert. denied, 138 S. Ct. 1302 (2018)