Tracking Hours in a Virtual World

Non-Exempt Employees Must Be Paid for All Hours Worked

The Fair Labor Standards Act (FLSA) requires covered employers to pay non-exempt employees at least minimum wage for all hours worked, and overtime pay, at time and a half, for all hours worked in excess of 40 hours per week. Hours worked are not necessarily limited to time spent physically at the job site.

Employees may “work” while shopping for dinner in the local grocery store with a Bluetooth device in their ear. Employees may “work” with a laptop on the beach during a family vacation. Employees may “work” while standing in line at the pharmacy, the amusement park or the bank while they flip through e-mails on their BlackBerrys. But is an employee who reviews e-mails on her BlackBerry really working? How about an employee who answers a phone call from a customer or co-worker while sitting at home by the pool? And if so, does she really have to be paid for it?

Many employers believe that if they do not require the employee to work at home or if they do not give the employee permission to work at home, they do not need to compensate the employee for this time. This assumption is wrong. Non-exempt employees who answer business calls on their cell phones or review and respond to e-mails on their BlackBerrys or laptops may need to be paid for this time, even if the employer prohibits after-hours work without express permission.

The law requires that non-exempt employees must be paid for all time “suffered or permitted to work” even if the employer did not request or require that the work be done. 29 C.F.R. ' 785.11. If an employer knew or should have known that an employee was working, the employer owes the employee compensation. It does not matter if the employer prohibited the employee from working off-duty or if the employee failed to obtain permission for the off-duty work. These facts may make the employee eligible for discipline, but they do not make him ineligible for compensation.

That does not mean that an employer must pay an employee every time the latter turns on a computer at home, answers a phone call, or flips through his e-mails. The Department of Labor and the courts have recognized that work that lasts only a few seconds or minutes need not be paid in certain circumstances.

What Constitutes 'Work'?

When the work is substantial, such as drafting a customer presentation on a laptop, the requirement that the time be paid even though the work may have been performed at home or off-duty is relatively straightforward. When the “work” is minor or insignificant, such as checking e-mails on a BlackBerry, the obligation to pay the employee is less clear. The FLSA regulations provide that an employer need not pay for de minimis time. Such time is an insignificant or insubstantial amount of time that cannot practically be precisely recorded. 29 C.F.R. ' 785.47. When determining whether time worked is de minimis, courts consider the administrative difficulty of recording the additional time, the size of the claim in the aggregate, and whether the employee has performed the work on a regular basis. If an employee simply thumbs through e-mail on his or her BlackBerry because he or she wants to keep up with the business, such conduct is arguably de minimis (and arguably, for the benefit of the employee, not the employer). If, on the other hand, the employee reviews and responds to work e-mails by creating page-long, detailed reports, it is arguably not de minimis and it is more likely that a court will require that the employee be paid.

As with most employment disputes, these issues are rarely raised unless the underpaid employee (who in the employer's mind has been voluntarily assuming this “work”) becomes disgruntled or the employer is unlucky enough to have a Department of Labor audit. By the time the employee complains, the challenged practice may have been going on for several years and there may be no practical way for the employer to rebut the employee's self-serving testimony about how often he or she worked remotely.

Employers Can Minimize the Risk of Claims

What can employers do to minimize the risk of future claims by employees?

• Make sure employees are properly classified. The biggest wage and hour mistake employers make is misclassifying employees as exempt or non-exempt. Each position's exempt or non-exempt status should be regularly reviewed to ensure that the employer is utilizing the most accurate and advantageous status. Positions often change over time. A formerly non-exempt position may have changed into an exempt position and vice versa. Job descriptions should be reviewed periodically and updated to reflect the position accurately.
• Set strong policies. Prohibit employees from performing work outside their normal schedules unless express written approval is obtained. However, be aware that even with these policies, an employee who violates them and works beyond his scheduled work hours may still be owed compensation. Enforce these policies and discipline employees to help prevent recurrences. If employees must work off-duty, require non-exempt employees to properly record and report such work as soon as it occurs.
• Train managers to be aware of the wage and hour restrictions. Managers and supervisors should be alert for off-hour e-mails from employees. Long e-mails from an hourly employee in the middle of the night may signal that off-hour work has been performed. Similarly, managers must not encourage unpaid off-duty work either expressly or implicitly. Non-exempt employees sometimes claim that off-duty work was implicitly required because supervisors sent them off-duty e-mails and expected them to respond, or they were required to complete an amount of work that could not possibly be completed during the employees' regular hours.
• Restrict the provision of technical equipment. Where possible, employers should avoid providing non-exempt employees with BlackBerrys, cell phones, laptops or similar devices. The provision of such equipment may imply a need to use it. If such equipment is required for the employee's job, consider requiring non-exempt employees to leave the equipment at the job site at the end of the day.
• Establish a time-keeping procedure. If the employee is expected to work at home or off-hours, establish a process to track the time accurately. One of the advantages of technology is that much of the equipment can also be monitored to determine when it is being used. In addition to requiring employees to record their own time, use the technology itself to help record the time accurately.

Don't Forget About Exempt Employees

Employers do not have the same issues when exempt employees use technology to work from home. One of the advantages of exempt status is that an employer is not legally required to pay exempt employees additional compensation beyond their regular salary for extra hours of work. However, even with exempt employees, BlackBerrys, cell phones and other technological devices have the potential to create wage and hour violations.

In order to remain exempt from overtime provisions, many exempt employees must be paid on a salary basis. This means that they must be paid the same full salary for any week in which any work is performed, regardless of how much work is performed that week.

There are specific times when an employer may refuse to pay a salaried employee for time not worked. An employee who does not work any part of a full week (for example if the employee were on furlough) need not be paid. Similarly, if an employee takes off a full day for personal reasons (not sickness) the employer may deduct a full day's pay from the employee's salary.

However, if a salaried employee is furloughed for a week without pay, but spends time responding to e-mails, these e-mail exchanges could require that the employee be paid a full week's salary. Similarly, if an exempt employee takes an unpaid personal day but stops fishing for half an hour to respond to e-mails or voice mails, such activity may negate an employer's ability to leave the day unpaid.

Leave Banks

In general, employers can avoid these scenarios if the time away from work is paid through a leave bank. An employer can reduce the employee's leave bank for a vacation day even if the employee worked for part of the day. The FLSA requires that the employee be paid his full salary. For purposes of the FLSA, it does not matter if part of that salary is paid through a leave bank.

Conclusion

In today's world, it is not unusual for the home lives of exempt salaried employees to be interrupted by a ringing cell phone and buzzing BlackBerry. In general, this does not create an additional burden on the employer. However, in those limited circumstances where an employer is seeking not to pay an exempt employee, the employer must be cautious about the effect an employee's off-duty work may have on its plans.

Patricia Anderson Pryor, a member of this newsletter's Board of Editors, is a partner in the Labor and Employment Department at Taft, Stettinius & Hollister LLP. Ms. Pryor represents and advises employers in all forms of litigation and dispute resolution, including mediation and arbitration, and in managing all aspects of the employment relationship. She is a frequent speaker at legal seminars and to employers and professional groups, and has been featured on the radio broadcast, Employment Straight Talk.

Technology is a necessary evil for most businesses. Along with all of the advances, efficiencies and cost-savings that today's technology provides, it brings as many headaches, distractions and legal pitfalls for the employment relationship. Privacy issues, data security risks and document-retention nightmares are just some of the issues created when technology falls into an employee's hands.

Another, often overlooked issue is the loss of the clear distinction between working and non-working time. On the one hand, employees spend more time at work on personal Web sites and social network sites. On the other hand, employees spend more time outside of work, working.

Technological advances are supposed to help employees work more efficiently, yet they also tend to make employees work longer. BlackBerrys, cell phones, laptops and access to virtual network connections all allow employees to “work” from virtually anywhere. For many employees, the work day no longer ends at 5 p.m. After-hour calls, e-mails or employees just wanting to get ahead on the next day's work all lead to potential wage and hour issues for employers.

Non-Exempt Employees Must Be Paid for All Hours Worked

The Fair Labor Standards Act (FLSA) requires covered employers to pay non-exempt employees at least minimum wage for all hours worked, and overtime pay, at time and a half, for all hours worked in excess of 40 hours per week. Hours worked are not necessarily limited to time spent physically at the job site.

Employees may “work” while shopping for dinner in the local grocery store with a Bluetooth device in their ear. Employees may “work” with a laptop on the beach during a family vacation. Employees may “work” while standing in line at the pharmacy, the amusement park or the bank while they flip through e-mails on their BlackBerrys. But is an employee who reviews e-mails on her BlackBerry really working? How about an employee who answers a phone call from a customer or co-worker while sitting at home by the pool? And if so, does she really have to be paid for it?

Many employers believe that if they do not require the employee to work at home or if they do not give the employee permission to work at home, they do not need to compensate the employee for this time. This assumption is wrong. Non-exempt employees who answer business calls on their cell phones or review and respond to e-mails on their BlackBerrys or laptops may need to be paid for this time, even if the employer prohibits after-hours work without express permission.

The law requires that non-exempt employees must be paid for all time “suffered or permitted to work” even if the employer did not request or require that the work be done. 29 C.F.R. ' 785.11. If an employer knew or should have known that an employee was working, the employer owes the employee compensation. It does not matter if the employer prohibited the employee from working off-duty or if the employee failed to obtain permission for the off-duty work. These facts may make the employee eligible for discipline, but they do not make him ineligible for compensation.

That does not mean that an employer must pay an employee every time the latter turns on a computer at home, answers a phone call, or flips through his e-mails. The Department of Labor and the courts have recognized that work that lasts only a few seconds or minutes need not be paid in certain circumstances.

What Constitutes 'Work'?

When the work is substantial, such as drafting a customer presentation on a laptop, the requirement that the time be paid even though the work may have been performed at home or off-duty is relatively straightforward. When the “work” is minor or insignificant, such as checking e-mails on a BlackBerry, the obligation to pay the employee is less clear. The FLSA regulations provide that an employer need not pay for de minimis time. Such time is an insignificant or insubstantial amount of time that cannot practically be precisely recorded. 29 C.F.R. ' 785.47. When determining whether time worked is de minimis, courts consider the administrative difficulty of recording the additional time, the size of the claim in the aggregate, and whether the employee has performed the work on a regular basis. If an employee simply thumbs through e-mail on his or her BlackBerry because he or she wants to keep up with the business, such conduct is arguably de minimis (and arguably, for the benefit of the employee, not the employer). If, on the other hand, the employee reviews and responds to work e-mails by creating page-long, detailed reports, it is arguably not de minimis and it is more likely that a court will require that the employee be paid.

As with most employment disputes, these issues are rarely raised unless the underpaid employee (who in the employer's mind has been voluntarily assuming this “work”) becomes disgruntled or the employer is unlucky enough to have a Department of Labor audit. By the time the employee complains, the challenged practice may have been going on for several years and there may be no practical way for the employer to rebut the employee's self-serving testimony about how often he or she worked remotely.

Employers Can Minimize the Risk of Claims

What can employers do to minimize the risk of future claims by employees?

• Make sure employees are properly classified. The biggest wage and hour mistake employers make is misclassifying employees as exempt or non-exempt. Each position's exempt or non-exempt status should be regularly reviewed to ensure that the employer is utilizing the most accurate and advantageous status. Positions often change over time. A formerly non-exempt position may have changed into an exempt position and vice versa. Job descriptions should be reviewed periodically and updated to reflect the position accurately.
• Set strong policies. Prohibit employees from performing work outside their normal schedules unless express written approval is obtained. However, be aware that even with these policies, an employee who violates them and works beyond his scheduled work hours may still be owed compensation. Enforce these policies and discipline employees to help prevent recurrences. If employees must work off-duty, require non-exempt employees to properly record and report such work as soon as it occurs.
• Train managers to be aware of the wage and hour restrictions. Managers and supervisors should be alert for off-hour e-mails from employees. Long e-mails from an hourly employee in the middle of the night may signal that off-hour work has been performed. Similarly, managers must not encourage unpaid off-duty work either expressly or implicitly. Non-exempt employees sometimes claim that off-duty work was implicitly required because supervisors sent them off-duty e-mails and expected them to respond, or they were required to complete an amount of work that could not possibly be completed during the employees' regular hours.
• Restrict the provision of technical equipment. Where possible, employers should avoid providing non-exempt employees with BlackBerrys, cell phones, laptops or similar devices. The provision of such equipment may imply a need to use it. If such equipment is required for the employee's job, consider requiring non-exempt employees to leave the equipment at the job site at the end of the day.
• Establish a time-keeping procedure. If the employee is expected to work at home or off-hours, establish a process to track the time accurately. One of the advantages of technology is that much of the equipment can also be monitored to determine when it is being used. In addition to requiring employees to record their own time, use the technology itself to help record the time accurately.

Don't Forget About Exempt Employees

Employers do not have the same issues when exempt employees use technology to work from home. One of the advantages of exempt status is that an employer is not legally required to pay exempt employees additional compensation beyond their regular salary for extra hours of work. However, even with exempt employees, BlackBerrys, cell phones and other technological devices have the potential to create wage and hour violations.

In order to remain exempt from overtime provisions, many exempt employees must be paid on a salary basis. This means that they must be paid the same full salary for any week in which any work is performed, regardless of how much work is performed that week.

There are specific times when an employer may refuse to pay a salaried employee for time not worked. An employee who does not work any part of a full week (for example if the employee were on furlough) need not be paid. Similarly, if an employee takes off a full day for personal reasons (not sickness) the employer may deduct a full day's pay from the employee's salary.

However, if a salaried employee is furloughed for a week without pay, but spends time responding to e-mails, these e-mail exchanges could require that the employee be paid a full week's salary. Similarly, if an exempt employee takes an unpaid personal day but stops fishing for half an hour to respond to e-mails or voice mails, such activity may negate an employer's ability to leave the day unpaid.

Leave Banks

In general, employers can avoid these scenarios if the time away from work is paid through a leave bank. An employer can reduce the employee's leave bank for a vacation day even if the employee worked for part of the day. The FLSA requires that the employee be paid his full salary. For purposes of the FLSA, it does not matter if part of that salary is paid through a leave bank.

Conclusion

In today's world, it is not unusual for the home lives of exempt salaried employees to be interrupted by a ringing cell phone and buzzing BlackBerry. In general, this does not create an additional burden on the employer. However, in those limited circumstances where an employer is seeking not to pay an exempt employee, the employer must be cautious about the effect an employee's off-duty work may have on its plans.

Patricia Anderson Pryor, a member of this newsletter's Board of Editors, is a partner in the Labor and Employment Department at Taft, Stettinius & Hollister LLP. Ms. Pryor represents and advises employers in all forms of litigation and dispute resolution, including mediation and arbitration, and in managing all aspects of the employment relationship. She is a frequent speaker at legal seminars and to employers and professional groups, and has been featured on the radio broadcast, Employment Straight Talk.