In today’s technologically advanced workplace, it has become increasingly difficult to avoid off-the-clock work. Current technology, certainly as it relates to iPads, texts and email, allows employees to work from anywhere at any time of the day or night. Many employees, both exempt and non-exempt, spend time reading and/or responding to work-related emails and texts when they are technically off the clock or off duty. Many also use their laptops to complete work-related projects. In the case of properly classified “exempt” employees, such afterhours work is a non-issue. They are not entitled to overtime pay for work beyond 40 hours per week.
However, when such afterhours work is regularly done by overtime-eligible, non-exempt employees, it creates liability for the employer under the Fair Labor Standards Act (FLSA), as well as similar state wage and hour laws. If a number of non-exempt employees are engaging in such off-the-clock activity, the potential for substantial overtime liability, as well as a collective (class) action is significant. Wage and hour lawsuits are among the most commonly filed workplace legal actions in the courts today. They are easy to file and are expensive and time-consuming for employers to defend. For employers who lose these cases the backpay can be doubled and plaintiffs’ attorney’s fees become the responsibility of the defendant.
To pay or not to pay?
There are numerous work-related activities that can result in off-the-clock work that may be legally compensable work time. For example, employers routinely requiring pre- or post-shift meetings could be creating pay liability. To be compensable as off-the-clock work, such meetings must be pursuant to an explicit policy or established practice requiring employees to report early or stay at the end of a shift to attend such meetings. The occasional ad hoc meeting to address a specific issue will generally not qualify as compensable. Similarly, if an employer regularly permits or “suffers” employees to engage in preliminary or post-liminary functions that are arguably an intrinsic element of the job, such as completing work-related physical or clerical tasks, responding to customers or clients, start-of-the day preparations or end-of-the-day activities, such work is likely compensable time. However, if the work activities are “de minimis,” meaning the time involved is insubstantial and indeterminate, such as of a few seconds or minutes duration, it would be non-compensable time under well-established FLSA precedent. But, the “de minimis” defense to a claim is unique and very fact-specific.
Most often, claims for unpaid work time involve activity of which the employer was totally unaware. Typically, a claim is made by an employee or employees of having performed work-related duties either before or after the scheduled workday, usually over some extended period of time. This generally creates potential overtime liability. The liability period under FLSA can extend back three years. The employer is now put in the position of having to disprove the claims. With no time records or other documentation to rely upon, it puts the employer in a difficult legal position since the presumption is in favor of the employee. If the employees claiming the off-the-clock work produce any type of documentation showing when they engaged in such activity, an employer would likely be unable to refute the claim.
So, what should an employer do to minimize the potential for such wage claims? First, employers should have in place a policy clearly requiring employees to receive prior authorization before engaging in any overtime work. Secondly, as a necessary adjunct, the employer should also have a policy requiring employees to report all off-the-clock work, and a reasonable process for doing so.
The employer should provide examples of what activities would be considered working off-the-clock. If employees ignore the policy and fail to report off-the-clock work for which they seek payment, you will have a strong argument that they are ineligible for additional pay, provided you did nothing to prevent or discourage employees from properly reporting such work. However, keep in mind that the normal rule under the FLSA is that such employees must be paid, but can be justifiably disciplined for violating the policy. Repeated violations could ultimately support termination for failure to follow the policy.
Off-the-clock work and authorized overtime-only policies, like all workplace policies, should be periodically updated. They should be conspicuously posted in the workplace as well as included in employee handbooks. New employees should be required to review the policies as part of orientation. Employers should also consider training supervisors and managers on what constitutes off-the-clock work.
Having the recommended policies in place and training supervisors is not a guarantee that off-the-clock work claims will not arise in the workplace. They will allow companies to defend against one of today’s most frequently filed wage and hour claims, and hopefully help avoid expensive overtime liability and litigation.