The Fair Labor Standards Act
In the second installment of “Telecommuting Employees and COVID-19,” we consider the Fair Labor Standards Act (FLSA) and its application to telecommuting employees: who it protects; what it requires of employers; and how employers can avoid violations as an increasing number of employees are working remotely in the face of a global pandemic.
The FLSA governs minimum wage, overtime pay, and employer recordkeeping for non-exempt employees (Reminder: it does not cover independent contractors). An exempt employee is governed by the FLSA but is “exempt” from FLSA overtime rules and is not entitled to receive overtime pay. The FLSA mandates that non–exempt employees receive overtime pay equivalent to 1.5 times their regular rate of pay for all hours worked over 40 hours in a workweek.
An employee is exempt from FLSA overtime rules if all the following requirements are met:
- The employee receives a salary (as opposed to an hourly rate of pay);
- The employee’s salary exceeds the FLSA minimum salary threshold; and
- The employee performs exempt job duties.
An employee might meet the salary basis and salary limit requirements, but if he or she does not also perform exempt job duties, the employee is non-exempt. Exempt job duties involve relatively high–level work, and the determination involves an evaluation of the actual job tasks and how they fit into the company’s overall operations. Exempt job duties typically fall into one of three categories:
- Executive. The employee’s job duties involve management as a primary duty, i.e., the regular supervision of two or more employees and input as to hiring, firing, or promotions. Examples include executive officers, managers, and supervisors.
- Professional. This category includes “learned professionals” with specialized higher education and creative professionals. Examples include doctors, lawyers, and actors or musicians.
- Administrative. The employee’s job duties consist of office or nonmanual work that is directly related to management of business operations of the employer and involves exercise of independent judgement on significant matters. Examples include executive assistants, or employees engaged in public relations or human resources.
The FLSA requires employers to pay non-exempt employees for all time worked, including work done remotely. Common violations include improper deductions in overtime weeks and failing to record and pay employees for “off-the-clock” work. Avoiding these violations becomes more difficult for employers when their employees are working from home. Employees working from home due to the COVID-19 pandemic face the challenge of working while managing other responsibilities, such as caring for children or assisting with remote learning, often during normal working hours. Many employers recognize the need for flexible, non-traditional working hours for employees in such circumstances. However, the shift to a more accommodating work schedule poses additional risk to employers working to remain compliant with FLSA rules. Variable working hours can be difficult to track for telecommuting employees, and employees do not always report all time worked. Additionally, an employer’s timekeeping method may not properly track all of an employee’s compensable time. Unreported “off-the-clock” work and time sheet errors may also interfere with accurate overtime calculations.
This summer, the Department of Labor offered guidance for employers in the wake of the global pandemic. (1) The guidance explains that employers must compensate employees for all hours of remote work actually performed away from the primary worksite, including overtime work, in accordance with the FLSA, provided that the employer knew or had reason to believe the work was performed. This includes hours of telework which were unauthorized or unreported. Employers are required to exercise “reasonable diligence” to acquire actual or constructive knowledge that employees are working unscheduled hours. An employer may satisfy this requirement by providing reasonable time-reporting procedures and compensating employees for all reported hours; an employer is not required to undergo impractical efforts to investigate further and uncover unreported hours of work. Employers should remember that they cannot prevent or discourage employees from accurately reporting the time he or she has worked.
Employers should implement telecommuting policies which clearly address work time, reporting procedures, “off-the-clock” work, rounding practices, and break periods, accounting for the unique peculiarities associated with working from home during a pandemic.
Kuiper Law Firm, PLLC understands the demands employers face as they navigate compliance with state and federal employment laws. If you have questions about the information in this article, or how a remote work policy would benefit your business, do not hesitate to contact us.
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(1) See DOL COVID-19 Timekeeping Guidelines for Telecommuting Workers (July 2020) and DOL Field Assistance Bulletin No. 2020-5 (August 2020).