Takeaways
- Answering emails, responding to texts, and completing assignments after hours can create compensable work time for remote employees.
- Clear timekeeping policies, accurate recordkeeping, and supervisor training can help employers reduce the risk of off-the-clock wage claims.
- Employers with remote workers in multiple states must account for applicable state-specific wage, overtime, and employment law requirements.
As the number of employees working from home in the post-COVID era has increased, so too have wage and hour claims filed by remote employees. This article discusses the most common issues and steps employers should take to ensure they are not facing off against employees in court.
The Basics
In Michigan, as in most states, employers are required by statute to pay non-exempt employees for all hours worked, and pay overtime at time and a half the employee’s regular wage for all hours worked more than 40 hours in a workweek. A non-exempt employee is one who does not come within one of the exempt classifications, which are administrative, executive, and professional employees, outside sales personnel, computer analysts, programmers, and software engineers, and highly compensated employees who customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee. Despite relatively straightforward concepts, employers have run afoul of these requirements with respect to employees working in a traditional on-site work environment. Common “off the clock” violations include: (1) employees performing work before the start of their daily work schedule, (2) employees continuing to work after the end of their daily work schedule; (3) employees working during or through an unpaid break; and (4) employees working outside their normal work hours. Employees who are asked to perform work in any of these scenarios must be paid. Importantly, employees must also be paid if they perform work in any of these scenarios on their own initiative when the employer knew that this was occurring and did not do anything to stop it.
Preventative Measures
Given that an employee’s home can feel like their work site, the employee might feel they are “always at work,” employees may not think twice about sending or responding to a text or email before or after hours, making or accepting a phone call before or after hours, finishing a report at night to meet a deadline, or reviewing materials over the weekend for a Monday morning meeting. This and the lack of direct oversight of remote employees make the remote work arrangement particularly fertile ground for claims of unpaid time.
To make sure that your business minimizes the potential for an “off-the-clock” wage claim, employers with remote employees should do the following:
- Establish and Reinforce a Worktime and Timekeeping Policy. Employers should prepare and distribute to non-exempt employees a worktime and timekeeping policy that emphasizes that all hours worked must be reported, that employees will be paid for all hours worked, including overtime for all hours worked in excess of 40 hours in a workweek, and that employees are not to work during unpaid breaks, or at any time outside their regular work schedule unless requested or approved by their supervisor.
- Employee Acknowledgment. Employees should be required to acknowledge that they have received, read, and will abide by the worktime and timekeeping policy.
- Timekeeping System/Verification of Hours Worked.Each day, non-exempt employees should be required to record their hours worked, verify, either by signature or electronically, that the hours are complete and correct, and submit those verified hours to their supervisor. There are many software programs that allow for time to be electronically tracked, entered, and submitted through an employee’s computer or mobile device.
- Manager and Supervisor Training. Managers and supervisors must understand that if they communicate with non-exempt employees outside of their work hours, or require or request that such employees do any work outside their normal work hours, the time spent must be paid. The establishment of a rule prohibiting working outside of normal work hours does not relieve an employer from paying the employee for those hours worked, if the employee ignores the rule and management is aware that the employee is doing so, so management personnel must actively stop unwanted work if they do not want to pay for it.
- Regular Schedule. Although a non-exempt employee’s work schedule does not need to be the same as the in-office schedule, a schedule should be set for each remote employee, and not deviated from without supervisor approval. This will provide clear boundaries of when work should and should not be performed. Without a set schedule, remote workers may find their hours creeping upward. If this occurs, employers must pay overtime for every hour worked over 40 in a workweek, even when the overtime hours were not scheduled. Failure to track hours accurately or discouraging reporting of overtime is unlawful.
- Meal and Rest Breaks. If part of a remote employee’s workday includes an unpaid break, the employee should be required to take it at that time, or at a revised time with supervisor approval. If an employee ends up working through the break, the time needs to be paid. Employees should be required to notify their supervisor in real time, with the supervisor determining whether the employee should shorten the workday by the amount of time in question, take a break later in the day, or work the remaining schedule, receiving “extra” pay that day.
- Exempt Employees. Employers should audit the duties performed by exempt employees, and either confirm they satisfy the applicable “duties test,” or reclassify them to non-exempt status. It is common for exempt employees to work more than 40 hours a week, and at times, significantly more. Some of the largest judgments against employers involve cases where exempt employees were misclassified, resulting in significant exposure for failure to pay for overtime.
- Multi-State Compliance. The laws of the state where an employee performs the work apply. In the event an employer hires an employee who lives in a different state from where the employer is located, the employer must comply with the other state’s minimum wage rates, overtime triggers, as well as employment laws (e.g., paid leave mandates).
- Retain Flexibility. One size “does not fit all” with respect to remote employees. Employers should retain the flexibility to address different situations in different ways.
- Compliance is Important/Potential Penalties. Penalties for violating wage and hour laws, which vary from state to state, can be substantial. For example, an employee working in Michigan who prevails on a claim of failure to pay for all hours worked can recover back wages owed, liquidated damages (100% of the back wages owed), interest on the amount owed, and their legal fees.
Attorneys in Dykema’s Labor and Employment Law Practice are available to assist employers in complying with any of the issues addressed in this article, as well as the myriad of employment laws affecting employers.