An employer’s obligation to track compensable hours of its employees and compensate employees accordingly is not a new concept. Most employers know of that obligation under the federal Fair Labor Standards Act (FLSA). Yet, tracking hours of remote workers has always been a challenge. Recognizing this issue and the need to address modern day technology at this time of increased remote work, the U.S. Department of Labor (DOL) recently issued a field assistance bulletin explaining employers’ obligations for tracking compensable hours worked by non-exempt remote employees. This is the first update to remote worker guidance provided by the DOL since 1961.
What you need to know
The DOL explains what time is compensable and breaks the standard into two scenarios: when an employer has actual knowledge of the work performed and when the employer has constructive knowledge. The constructive knowledge guidance incorporates remote employee challenges.
Actual knowledge of work performed
Under the FLSA, an employer must pay for all time that an employee is “suffered or permitted to work.” This means that an employer must pay an employee for all hours the employee is scheduled and/or directed to work, but it also means that an employer must pay for time that an employee is permitted to perform unscheduled work. If an employee performs work outside of the employee’s scheduled hours, the employee still must be compensated for that work, although an employer can discipline an employee for performing work outside of scheduled working hours and prohibit such work going forward. Simply put, if the employer knows that work is being performed, the time must be compensated.
In a remote work scenario, it is more challenging for employers to know when work is or is not being performed by remote employees. Actual knowledge may be derived from employees reporting that they worked extra hours, or it may be obtained through other means, such as a supervisor directing or receiving work outside of an employee’s scheduled work hours. If the employer has actual knowledge that work is being performed, it must have the employee report/record the hours worked and compensate the employee for the time, including any applicable overtime compensation.
Constructive knowledge of work performed
Under the FLSA, employers must also pay for all time they should know is being worked. This should know standard is very important for employers to understand. The DOL guidance explains that this means that employers must use reasonable diligence to determine all hours being worked by their employees. For example, an employer may provide non-exempt employees with a form explaining that no work is to be performed off-the-clock and that if they perform any work outside of their scheduled working hours like responding to emails, texts or phone calls, they must report it using that form. If the employee fails to report the time worked, the employer generally does not have an obligation to investigate further to determine whether any work is being performed off-the-clock.
The DOL explains that the reasonable diligence standard is based on what an employer should know, not on what an employer could know. Acknowledging the difficulty in defining what this means today, given the advances in technology and substantial increase in remote workers, the DOL guidance provides helpful parameters:
“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.”
Applying this guidance to your business
The DOL’s guidance, while specific to the FLSA, applies equally under Wisconsin wage and hour law. It is also important to note that, while the DOL’s guidance is favorable to employers, courts may interpret the laws differently. The bottom line is that employers must implement and communicate reasonable procedures for reporting ALL hours worked by remote employees to reduce the risk of wage claims. This also means that employers should not discourage accurate and complete reporting of work hours or tell employees that work performed outside of scheduled working hours will not be compensated.
Employers should examine current remote worker arrangements and ensure robust record keeping systems, communication plans, and clear remote policies and practices that define work expectations are in place. For example, remote worker policies should make clear that employees are obligated to accurately record all time and employers should enforce the requirement.
Stay tuned for additional remote worker best practices from Godfrey & Kahn’s Labor, Employment & Immigration Law attorneys.