The Basic Premise of Working Time under the FLSA
First, let’s start with the basic premise of what constitutes work time under the FLSA. In simple terms, work time is any time an employee engages in work-related activities and a benefit is conferred upon the employer as a result of the employee’s activities. Therefore, it doesn’t matter if the employer approved the work time for the employee or not. Under the law, the employer is obligated to pay an employee for work time, approved or not, if the employer knew or should have known that the employee was working. Keep in mind that this rule applies only to non-exempt employees. This is the category of employees who are entitled to overtime when they exceed the regular work hours’ threshold, usually set at 40 hours in a work week. This, too, is often a pitfall because oftentimes employees are misclassified as exempt when they should be non-exempt based the actual job duties performed. But in the event an employee is properly classified as non-exempt and thus entitled to receive overtime for hours worked in excess of 40 hours in a work week, it is imperative that employers track and record working time accurately.

This clearly means that if a non-exempt employee continues to engage in any activities that advance a work-related purpose after the employee’s normal work schedule ends, an employer must record the time as working time and compensate the employee appropriately. Such “off-the-clock” time will become more and more of an issue now that technology has advanced to the point where employees can complete tasks via remote server connections and through the use of smart phones , PDAs, and all of the high-tech gadgets we are all beginning to embrace as a can’t live without convenience. But the legal concerns must be carefully weighed against the benefits of allowing these tools to be used for work purposes. Take for instance, the employee that leaves work when her schedule ends but then gets home and remembers she needs to check her email about an important meeting her boss was hoping to confirm at the end of the day. While checking her email the employee also decides to continue working on a memorandum that she was drafting before she left work. Before logging off that evening, the employee sends an email to her boss about the meeting that needed to be confirmed. Her boss emailed her right back and asked her to give the client a call on her drive in to work the next day to get information about the meeting location; the employee was also instructed in that email by her boss to call her boss and advise of the location. The total time spent on email and the memorandum was 3 hours. The phone calls the next day totaled about 15 minutes. Because all of this time constitutes work time due to the benefit conferred upon the employer as a result of the employee’s off-the-clock, work-related activities, the time is compensable and must be counted toward the employee’s overtime threshold hours. If, as result of the 3.25 additional work hours, the employee exceeds 40 hours worked in a work week, the employer is responsible for paying the employee at for the excess hours at a rate of one and one-half times the employee’s regular rate. No exceptions!

The Consequences
So what are the consequences when an employer fails to count off-the-clock time as hours worked and thus further fails to compensate an employee for this type of work time? If discovered either through a regulatory audit or a lawsuit by an employee, an employer would be required to pay the employee all of the back wages owed for off-the-clock time and any and all other compensable work time. In some instances, an employer may be subject to paying double back wages as liquidated damages unless the employer demonstrates a good faith effort that a reasonable inquiry had been made regarding compliance and the objective to properly pay employees as required by law. However, there’s no guarantee per se that the assertion of a good faith defense will overcome having to pay double back wages. Further, the law allows an employee’s claim to go back two (2) years plus the employer may also be required to pay the employee’s attorney’s fees. If an employer is found to have intentionally violated the FLSA, an employee may be awarded three (3) years of back wages. If doubled, this could add up quickly, and if several employees are involved it could easily add up to millions!

The Cure
Quite frankly, it is generally not the case that an employer intentionally engages in bad pay practices. What is the case is that employers oftentimes lose sight of policy enforcement when it is unrelated to their core business objectives. But when you think about it, pay policies should be at the forefront of any organization’s core business objectives because the personnel budget is usually one of the largest expense categories, if not the largest. In order to attract good people, you have to offer competitive pay. In order to retain good people, you have to recognize and reward talent as well as allow high performers to take advantage of training opportunities that will facilitate professional growth (training time is another pitfall often not captured as hours worked n or compensated when required). To do all of this, it costs organizations substantial sums to be competitive in recruiting a good talent pool. Therefore, organizations should ensure that policies designed around pay are compliant and in line with best practices. More importantly, organizations must ensure that pay policies are being enforced consistently across the organization. While the cost of high turnover rates is high, the cost of failing to comply with legal standards regarding pay practices can be higher. Still, an employer cannot control human behavior and prevent every good and talented employee from leaving an organization. However, an employer, for the most part, can effectively manage its pay practices and avoid unnecessary costs related to FLSA compliance failures. Here’s how:

1. Stay abreast of the regulatory changes related to the FLSA and state wage and hour laws, if applicable.

2. Routinely review and update your organization’s employment policies and procedures related to compensation.

3. Establish clear and concise policies related to off-the-clock working time and develop manageable procedures for tracking and reporting this time.

4. Enforce policies that prohibit employees from working off-the-clock if permission has not been authorized through disciplinary measures, but keep in mind that employees still must be compensated for off-the-clock working time even when unauthorized.

5. If your organization utilizes an electronic time and attendance system, provide access to the system after hours and remotely so that employees can clock-in at any given time in order to ensure that work time is being accurately captured and reported. Again, if employees fail to follow procedures for clocking in remotely and after hours, where available, utilize disciplinary measures to enforce compliance with organizational policies concerning working time.

Stay tuned for the next post on on-call and standby time, a pitfall that public sector employers encounter quite frequently, especially in public safety departments like law enforcement and fire and EMS as well as other first responders and public works employees.