As the COVID-19 pandemic continues, many employees continue to work remotely. Remote work has many benefits and allows the workplace to operate even when employees cannot be physically in the workplace, but this type of work does not come without risks for employers. One area that can be particularly perilous for employers is ensuring that employees are paid correctly. Not paying employees correctly, even inadvertently, can be costly; employees who recover in a lawsuit for improperly paid wages may receive twice the amount of unpaid wages, as well as attorneys’ fees and other damages. So, employers must be vigilant to pay all employees correctly. This article discusses some potential pitfalls for employers, particularly in a remote workplace. Notably, this article focuses on the requirements under the federal Fair Labor Standards Act (FLSA). Some states or other localities may have more restrictive requirements, so employers should check the requirements for their respective localities to ensure compliance with applicable law.

It’s difficult to track time for non-exempt employees working remotely, so I just pay them based on their regularly scheduled office hours even if they actually work different hours. Is that okay?

Non-exempt employees, or employees who, under the FLSA, must be paid overtime compensation for hours worked over 40 in a workweek, must be paid for all hours worked. To ensure that these employees are compensated for all hours worked, employers should require employees to accurately track their time, even if the hours worked are different from an employee’s regular in-office hours. Employers should then pay the employees based on the actual time worked.

The United States Department of Labor recently issued guidance for employers regarding an employer’s obligation to track teleworking employees’ work hours. The guidance does not change the law or institute any new policy, but rather reminds employers that they must pay employees for all hours the employer knows or has reason to believe its employees have worked. The guidance specifically states an employer must exercise “reasonable diligence” to ensure that non-exempt employees are being paid for all hours worked. Reasonable diligence includes having a “reasonable reporting procedure” for employees to report unscheduled hours worked and then compensating employees for all reported hours. If an employer has a reporting procedure for employees to report all hours worked, including unscheduled hours, and an employee does not accurately report all hours worked, the employer does not have a responsibility to inquire whether an employee has worked unreported hours if the employer has no reason to believe the employee may be working unreported hours. However, a reporting process does not constitute reasonable diligence if the employer “prevents or discourages” an employee from accurately reporting hours worked.

Employers should have clear, written policies setting forth their timekeeping requirements, particularly for employees working out of the office. It can also be helpful to have employees sign an acknowledgment of these requirements, and employers may want employees to sign an acknowledgement of timekeeping requirements separate from a general handbook or other policy acknowledgment to show that the employee knew specifically about timekeeping requirements. Employers should also ensure that they are uniformly enforcing these policies for all non-exempt employees. Employees who do not comply with timekeeping requirements should be disciplined in accordance with employer policy.

I have a non-exempt employee working overtime without my permission. Do I have to pay the employee for those hours?

As explained above, employers must pay their non-exempt employees for all hours worked. This requirement includes paying employees for hours worked that the employer knows about, even if the hours are worked without the employer’s permission. For example, if an employer knows or has reason to believe that an employee is responding to work emails after hours, the employer must pay the employee for the time so spent.

The requirement to pay employees for all hours worked, even hours worked without permission, does not mean that employees cannot face consequences for working hours without permission. Employees can, and likely should, receive discipline for unauthorized work. Disciplining employees who work hours without permission shows that the employer takes paying its employees seriously and discourages employees from working “off the clock.”

Further, employers should ensure that supervisors do not set an expectation for non-exempt employees to respond to work emails or phone calls after hours. Supervisors should be discouraged from contacting non-exempt employees after work hours. Further, if a non-exempt employee receives an email from his or her supervisor after hours, the employee may feel pressure to respond, so supervisors may want to take steps such as putting “Do Not Respond Until Work Hours” in the subject line of an email sent after hours. Likewise, employers may want to consider whether non-exempt employees should have access to work email accounts on their personal devices because time spent checking work email, even if an employee does not respond to any such emails, could be considered compensable time.

I have an exempt employee who has been taking mornings off to attend to personal matters. Can I dock that employee’s pay for the time the employee is not working?

Exempt employees are not entitled to overtime compensation for hours worked over 40 in a workweek. These employees must be paid a set salary that covers all hours worked in a week. Employers can only deduct from an exempt employee’s pay under very specific circumstances, such as when the employee is absent from work for one or more full workdays. So, employers cannot deduct from an exempt employee’s pay for partial-day absences.

Although employers cannot deduct pay for partial-day absences, an employer is not without redress where an exempt employee takes partial days off. For example, an employer can require the employee to use accrued paid time off for absences. Similarly, employers should determine whether employees qualify for paid leave under the Families First Coronavirus Response Act. Further, the employer can discipline the employee for attendance and any performance deficiencies.

It is worth noting that when disciplining employees for attendance or other performance deficiencies, employers should ensure that employees are disciplined evenly. For example, if a male employee is not disciplined for taking mornings off to help his children with remote learning, but a female employee is disciplined for the same thing, the female employee could allege sex discrimination. Employers should ensure that they are enforcing all of their policies equally for all employees.

I have an exempt supervisor who often fills in for non-exempt employees, so some weeks I pay the supervisor a set salary for all hours worked and other weeks I pay the employee an hourly rate depending on what the employee is doing that week. Is that okay?

Employers should be cautious about changing the classification of employees, particularly when the changes occur often. Employees are, by default, non-exempt employees. To establish an employee as exempt, the employer must ensure that the employer pays the employee a salary of at least $684/week for all work performed and that the employee’s job duties fall into one of the exemption categories under the FLSA. Switching an employee back and forth from exempt to non-exempt could be indicative of an employer trying to avoid overtime obligations. If the employee brought a wage claim, the employee may be able to establish that the employee should have been classified as non-exempt even during the weeks the employee was paid as an exempt employee and the employer could be liable for unpaid overtime during those weeks.

This is not to say that employers can never reclassify employees. Although employers should strive to limit the number of times they reclassify an employee, in instances where reclassification is warranted, the employer should document all the reasons for reclassification. For example, if a non-exempt employee is reclassified as exempt because of a change in job duties that qualify the employee for an exemption, the employer should document the employee’s salary and all of the employee’s job duties to show the lawful reasons for the reclassification.

Further, although employees who do not qualify for an exempt status cannot be classified as exempt employees, employees who do qualify for exempt status can be classified as non-exempt employees. This may make sense for some employees, and, in these instances, employers must make sure that these employees track all of their time and are paid for all hours worked, including the applicable overtime rate.

In sum, employers should ensure that non-exempt employees are paid for all hours worked, even hours worked without permission. Employers should also have clear, written policies regarding timekeeping and pay, and enforce those policies consistently for all employees.

If you have any questions about any of the issues raised here, please contact your Labor and Employment counsel at Smith, Gambrell & Russell.