Remote Work and the Pandemic: New Guidance on How to Avoid Wage and Hour Liability

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Obermayer Rebmann Maxwell & Hippel LLPOn August 24, 2020, the United States Department of Labor (“DOL”) issued a Field Assistance Bulletin (“FAB”) regarding an employer’s obligation under the Fair Labor Standards Act (“FLSA”) to track the number of compensable hours worked by their teleworking/remote employees and their obligation to compensate them for such. While acknowledging that the COVID-19 pandemic has not changed this legal standard, the FAB did shed some light on some of the possible pitfalls that could be encountered by employers during these unprecedented times.

During the pandemic, many employers have allowed their employees to work from home—either because of mandatory state or local orders, or in the interest of health and safety. While some employers are already experienced with remote work, others had to learn and adapt on the fly.  This included tackling both the logistics of employees shifting their work spaces to the “home office,” but also the employer’s legal obligation to pay non-exempt employees for all hours spent working remotely. 

According to C.F.R. § 785.11-12, an employer is required to pay non-exempt employees for all hours worked, including work not requested but suffered or permitted to work, and including work performed at home.  In determining what hours are compensable, courts consider whether the employer had actual or constructive knowledge of the hours worked. This includes both scheduled and unscheduled hours. As stated in the FAB, employers must, “… pay for all work they know about, even if they did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work.”  Allen v. City of Chicago, 865 F.3d 936 (7th Cir. 2017). Therefore, in order to avoid providing additional unwanted compensation, employers bear the burden of preventing employees from performing any undesired work, if they knew or had reason to believe that such work was being performed.

In other words, the FAB highlights the employer’s responsibility to tell employees when NOT to work. Modern technology, e-mail, and remote access capabilities have made this duty increasingly important, and the pandemic has further eroded employer control over when, and how long, employees work. Before COVID, it was easier for employers to assume that an employee was not working when away from the office or job site. With the explosion of remote work since Spring of 2020, employers now shoulder an increased burden of being aware of when employees are working. For example, if a supervisor receives after hours or weekend emails, phone calls, and deliverables from his subordinates, the employer is arguably on notice that those subordinates are working. Unless those subordinates are salaried and fall within one or more exemptions (i.e. white collar executive, administrative or professional employees), they must be paid for that time. 

Employers who wish to limit the amount of compensable time worked by their non-exempt employees must institute and enforce rules prohibiting those employees from working hours outside of their regular work day, unless those hours have been approved in advance and in writing. Employers should also perform reasonable due diligence, such as following up with supervisors, to determine whether their non-exempt employees are complying with rules and policies.  Supervisors and managers should not be encouraging or requiring their non-exempt reports to complete work tasks at times that would violate such policies.

Given these challenges, we unfortunately anticipate that pandemic-related wage and hour lawsuits will continue to increase, and that employers that fail to adapt to this changing landscape could find themselves the target of such claims. As illustrated by other class action wage and hour matters, liability in such claims can be significant, and can include not only back wages, but also penalties and attorneys’ fees. A proactive approach to employee schedules, hours, and job responsibilities, and clear communication of expectations throughout the organization, are essential for employers who wish to minimize these risks.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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