Are employees receiving proper compensation for telework? This is the question many employers are facing as an historical number of employees are working from home due to the COVID-19 pandemic.

Employers that didn’t have telework policies and procedures in place prior to the pandemic may have trouble tracking compensable hours under the Fair Labor Standards Act (FLSA). The FLSA generally requires employers to compensate employees for all hours worked, including overtime. However, remote working arrangements can make it challenging to comply with the FLSA if employees are working outside their normally scheduled hours.

To assist employers in meeting their FLSA obligations for new teleworking arrangements that arose in response to the pandemic, the Department of Labor’s Wage and Hour Division issued Field Assistance Bulletin 2020-5 to guide employers in tracking the number of hours of compensable work performed by remote employees. This guidance advises employers to —

  • pay employees for all hours worked, including work that the employer knows or has reason to believe is being performed;
  • exercise “reasonable diligence” in acquiring knowledge of unscheduled hours worked, such as implementing a reporting procedure where employees can report unscheduled time worked;
  • not prevent or discourage employees from accurately reporting the time they worked; and
  • not allow employees to waive their right to compensation.

If an employee fails to report unscheduled hours worked through an established reporting procedure, the “reasonable diligence” standard does not require employers to uncover unreported hours. Even if an employer has access to an employee’s activities — such as digital records of an employee using their work computer or mobile device outside of reported hours — the employer is not required to sort through this information to determine whether the employee worked additional hours beyond what they reported. The FLSA does not require an employer to compensate an employee for unreported hours that the employer did not know about or have reason to believe the employee worked.

With many companies turning to teleworking arrangements for the foreseeable future, FLSA compliance is more critical than ever. Employers should make sure they have procedures in place to capture unscheduled time worked. A failure to properly compensate employees may lead to serious consequences, including penalties for violating federal and state law, harm to employee morale and damage to the company’s reputation.