DOL Issues Guidance on Teleworking Employees’ Hours of Work under the FLSA
Posted on 08/25/2020 at 01:53 PM by Mike Staebell
On August 24, 2020 the DOL’s Wage and Hour Division issued Field Advisory Bulletin (FAB) 2020-5 “to clarify an employer’s obligation to track and pay for hours of compensable work by employees who are teleworking or otherwise working away from premises controlled by their employers.” The guidance responds to FLSA issues created by telework that have been exacerbated as a result of COVID-19, but it also applies to any remote work arrangement.
The WHD last issued rules on the compensability of unsupervised working time in 1961—before teleworking was widespread. In 2019, the Bureau of Labor Statistics estimated 24% of working Americans performed some work at home on an average day. Remote work arrangements have expanded significantly in response to the COVID-19 pandemic. Accordingly, WHD issued FAB 2020-5 to clarify how it will apply its rules to teleworking.
FAB 2020-5 reaffirmed the following FLSA principles that apply to non-exempt employees who are paid based on hours of work, based on the DOL’s own rules and court decisions interpreting them:
- An employer must pay its non-exempt employees for all hours worked even if the employer did not ask for the work to be done. As long as the employer suffers or permits the work (e.g., allows the work, accepts the work, benefits from the work), it must pay for the work of its non-exempt employees.
- It is the employer’s obligation to exercise control over non-exempt employees to ensure that work is not performed if the employer does not want it.
- Work performed by non-exempt employees is compensable no matter where that work is performed—off- or on-premises, off- or on-site, at work or at home.
- Employees cannot waive their right to be paid for hours worked, unless such a waiver has been approved by a court or the DOL.
- Employers are not required to pay for work they did not know about and had no reason to know about.
- If the employer knows or has actual knowledge that a non-exempt employee has performed work, the hours must be counted and paid. Actual knowledge comes from employee schedules, employee time reports, and other employee reports or notifications.
- If the employer has reason to believe a non-exempt employee is performing work (constructive knowledge), that time also must be counted as hours worked and paid.
This last bullet point is the focus of this FAB on teleworking. Basically, it teaches that employers cannot stick their heads in the sand to avoid actual knowledge of hours worked and thus, avoid paying employees. Rather, the FLSA requires employers to exercise “reasonable diligence” that may lead to constructive knowledge of additional, unscheduled hours worked by non-exempt employees. One way employers can show this reasonable diligence is to set a reasonable reporting procedure for hours worked. During my 33 years of enforcing the FLSA at WHD, if the employer did not exercise any reasonable diligence, WHD would assert that the unrecorded, unpaid hours worked were compensable, and back wages would be owed.
In today’s working world, we can attempt to reconstruct employees’ work time even when they failed to report hours worked in established timekeeping systems. Phone and computer logs, texts and emails, contain clues about when employees are working and when they are not. A key takeaway from FAB 2020-5, however, is that employers are not required to undertake “impractical efforts to investigate” employees who do not follow the employer’s reasonable time reporting procedures for unscheduled hours of work. For example, employers do not have to sort through phone or other electronic records in order to cross-reference them against reported work time. The reasonable diligence standard only asks what the employer should have known, not what it could have known.
Still, employers are warned not to take FAB 2020-5 to mean that simply implementing a reasonable time reporting procedure is a safe harbor against paying for work their non-exempt employees failed to report. For instance, employers cannot expressly or implicitly prevent or discourage employees from accurately reporting work time under the organization’s reasonable reporting procedures.
It boils down to what I have told employers for the past 38 years:
- Create a reasonable, workable timekeeping policy that covers reporting unscheduled and scheduled work, work performed on- and off-site, and work performed with or without prior approval of management.
- Include disciplinary consequences for violating the timekeeping policy, but do not withhold pay for violations of the policy unless there is solid evidence of employee falsification or fraud.
- Educate all non-exempt employees and their supervisors on the policy and procedures, and the proper use of time reporting systems.
- Consistently enforce the policy with discipline, when warranted, including termination for repeated failure to report all work time.
- Not paying for time the employee failed to properly report is risky, and such decisions should not be made without the advice of an employment law professional who has wage and hour experience.
FAB 2020-5 includes a warning for non-exempt employees, which doubles as a possible defense for employers:
“When the employee fails to follow reasonable time reporting procedures[, or] . . . where an employee does not make use of a reasonable reporting system to report unscheduled hours of work, the employer is thwarted from preventing the work to the extent it is unwanted. . . . [and the employer] could not have ‘suffered or permitted’ work it did not know and had no reason to believe was being performed. Accordingly, failure to compensate an employee for unreported hours that the employer did not know about, nor had reason to believe was being performed, does not violate the FLSA.”
FLSA rules on hours worked are complex and can be counterintuitive in many respects. Employers should not shoot from the hip when deciding to withhold pay from employees for time they failed to record – no matter where it was worked, when it was worked, nor whether the employee had prior approval to work. Contact an employment law professional with wage and hour experience before taking action which could trigger a WHD investigate or private litigation.
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