Beware of This FLSA Pitfall: Off-the-Clock Work

Does responding to a work email over dinner still count as hours worked? Almost always, the answer is “yes.” And for non-exempt employees, these minutes quickly add up.

If employers aren’t compensating employees for off-the-clock work, they could be guilty of violating the Federal Labor Standards Act (FLSA) and subject to costly liabilities.  However, the challenge is accurately accounting for and determining if certain activities are off-the-clock, thus requiring compensation. Wage and hour lawsuit filings have increased 450% over the past 15 years, so it’s crucial that employers understand what is and what is not considered off-the-clock work for non-exempt employees.

What activities are considered off-the-clock?
Off-the-clock work is any work that is done for an employer which isn’t compensated for or counted toward a non-exempt employee’s hours for overtime. This work can take many forms but some examples include an employer allowing employees to set up a restaurant before a shift, prepare a worksite, complete paperwork after clocking out, train on personal time or wait when tasks aren’t immediately available - all of which are unpaid. A more common off-the-clock work trend occurs when employees use their personal phones to send work emails or texts outside of working hours, all without a mechanism to record time spent doing this work. 

Is off-the-clock work compensable?
The test courts use to help determine if a non-exempt employee must be paid for this work is fact-specific and open to subjective interpretation. Under federal law, two questions gauge whether the duties performed are: 

• Integral or necessary to perform the job, or the employer requires the employee to perform the duty.
• Up to the discretion of the employee as to when and where the work takes place. 

These two questions focus on the amount of control the employer has over the employee’s actions. There’s a direct correlation between the amount of control the employer exerts and the likeliness that this work is appropriately deemed as off-the-clock. When assessing amount of control, gauge if the employees’ tasks are required to perform the job, or if they’re required to perform tasks at a specific place and time.

For example, consider the activity of putting on and taking off uniforms. In most jurisdictions, the employer is required to pay if they require employees to perform this task in the workplace. However, payment may not be required if employees have the ability to don uniforms at home.  Another example relates to the work commute. Commute time is not normally compensable but if the employee drives a company car, is restricted on what they can do in the car, and driving is essential to the job, then this travel time is considered hours worked. The greater the amount of flexibility that the employee has for off-the-clock work, the less-likely they need to be compensated for such work.

The concept of flexibility also applies to whether waiting or on-call periods are compensable. When examining whether to compensate on-call employees, governing agencies or courts look at the restrictions imposed on the employee while on-call.  If the employee is required to remain at the worksite, the employer is almost always required to pay for such time because the employee is restricted in how they can spend this time for personal purposes.

Additional factors to consider include the required response time when called upon, the degree of attentiveness the employee must use while waiting for an assignment, the frequency and duration of calls to perform work duties, and the nature of the industry.

Examples where employees must be paid while on-call include “a fireman who plays checkers while waiting for alarms and a factory worker who talks to his fellow employees while waiting for machinery to be repaired” – situations with unpredictable, short waiting periods and occurring at the worksite.

Spent de minimus (too minor to merit)
This rule applies when a task of infrequent and insignificant period of time is performed outside of working hours. Consider how frequently the activity is performed and whether it’s part of the job; a two minute, uncompensated task performed every day when aggregated is not considered de minimus. Under the FLSA, there is no amount of time that an employer may arbitrarily ignore when compensating hours worked.

Additionally, many states and local jurisdictions provide additional protections to employees, so it is crucial to understand the law in the states where employees work. 

Strategies to Avoid Liability
To help avoid costly liabilities related to off-the-clock or on-call work, employers should get back to the basics in regards to training, enforcing policies, and encouraging managers to report prohibited work. Additional strategies include:  

• Audit the duties of all non-exempt employees to determine if there are any who are potentially performing unpaid work in violation of wage and hour laws.
• Verify that managers haven’t encouraged off-the-clock work. If they have the ability to modify time records, ensure there’s documentation of audits.
• Create a handbook policy prohibiting off-the-clock work and cover it in ongoing trainings.
• When possible, avoid issuing smart phones or laptops to non-exempt employees which can be used outside of working hours. If it is necessary to provide, then:
  • Enact policies prohibiting non-exempt employees from performing work duties without express authorization.
  • Notify non-exempt employees that unauthorized use of electronic devices for work purposes outside of work hours is subject to discipline.
  • Institute a time tracking system that accounts for the time that non-exempt employees perform duties while outside of their scheduled shift.
• If any non-exempt employees need to work remotely, create a time tracking system that accurately accounts for their hours worked.
• If employees have violated the policy by working off-the-clock, employers need to compensate for their time worked and discipline the employee for failing to comply with the policy.

Although the new overtime eligibility rule under the FLSA is still in limbo, the Department of Labor expects 4 million exempt employees will be re-classified as non-exempt and become required to track their hours. This is the ideal opportunity to educate all employees on off-the-clock policies to avoid employer liability and ensure that employees are paid for the work they perform.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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