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Wage and Hour Pitfalls of Telework

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Written by Haley Paul
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Thanks to COVID-19, many employers are still permitting some or all of their employees to work remotely. While telework presents a whole host of complications for employers, one of the primary concerns—or what should be a primary concern—among employers is properly tracking and calculating work time.

Under the Fair Labor Standards Act (the “FLSA” or “Act”) and its regulations, an employer is required to pay its employees for all hours worked, even work that was not requested but was allowed, including work performed at home.

Under typical circumstances, the Department of Labor (the “DOL”) generally considers the time between an employee’s “first and last principal task” in a work day to be compensable (with some exceptions). But given the fact that many workers are simultaneously having to care for children during school and childcare closures and/or caring for sick family members or are dealing with new and unique complexities of working from home, the DOL has made it clear that employees need only be compensated for time actually spent working. This permits employers and employees to agree to flexible schedules that more closely align with current needs.

New questions have arisen due to these new work-from-home arrangements. Namely, how do employers accurately track their employees’ working hours? How do employers ensure that employees are not inflating their hours, given the lack of oversight? What if employees under-report their hours, which could open employers up to significant liability under the FLSA?

The FLSA regulations make it clear that if the employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. An employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence.

So how do employers find a balance between creating policies that ensure employees do not over-report work hours and/or work unauthorized overtime while also ensuring that employees do not under-report their hours such that they invite liability for unpaid worktime? The DOL has indicated that the key is to provide a reasonable reporting procedure and carefully monitor employees’ hours. It may be time to invest in a better time-keeping software or app. Some of the newer programs have features such as random screen sampling and ability to track progress on specific projects.

If an employee fails to report unscheduled hours worked through such a procedure, the DOL has indicated that the employer is not required to undergo impractical efforts to investigate further and uncover unreported hours of work and provide compensation for those hours.

On the other hand, if the employer believes an employee is inflating hours or the employee is taking too long on a particular job assignment, it is time for a verbal or written warning, a performance improvement plan or perhaps even some informal coaching, depending on the circumstances (including, whether this is the first instance or an ongoing problem and whether the employer believes the issue to be an intentional misstatement or an issue of inefficiency).

If you are permitting employees to telework and you have concerns about potential under or over-reporting of workhours, it is important to discuss your concerns with an experienced labor and employment attorney. Wage and hour violations can be grossly expensive and time consuming. It is always better to catch and correct the problem early, rather than through a DOL investigation or lawsuit.

These materials are made available by Stibbs & Co., P.C. for informational purposes only, do not constitute legal or tax advice, and are not a substitute for legal advice from qualified counsel. The laws of other states and nations may be entirely different from what is described. Your use of these materials does not create an attorney-client relationship between you and Stibbs & Co., P.C. The facts and results of each case will vary, and no particular result can be guaranteed. The facts and results of each case will vary, and no particular result can be guaranteed. Employers should consult their tax advisors concerning the application of tax laws to their particular situation.

Employers are also encouraged to seek legal counsel prior to taking actions to avoid violations of federal or state employment laws including, but not limited to, Title VII of the Civil Rights Act of 1964.


Topic: Employment Law

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