TIME
IS MONEY: ON OR OFF THE CLOCK?
Many managers still don’t understand the
Fair Labor Standards Act.
Virtually every week I hear about
another employer allegedly requiring, encouraging or tolerating situations in
which nonexempt employees are working off the clock. Even large employers with
robust compliance programs are not immune to such legal missteps.
Of course, it is not just larger
employers being sued. Employers with relatively few workers – that literally
cannot afford the cost of defense – are being sued, too.
The goal for employers is not to
win “off-the-clock” cases but to avoid them.
Consider these suggestions for
minimizing your exposure to such claims and maximizing your chances of winning
if such a claim is brought.
Basic Principles
Some
strategies for avoiding off-the-clock cases should take employers back to the
basics, including training and retraining, enforcing policies that prohibit
off-the-clock work, and encouraging managers to report suspected off-the-clock
work to HR.
Train and retrain. Provide supervisors
with training that makes clear they cannot require, encourage or even suggest
that nonexempt employees work off the clock.
The most
important message to convey is that supervisors cannot direct someone to work
off the clock, explicitly or implicitly. Also, include guidance on how to
address restrictions on overtime.
The
untutored have said, “We cannot pay for any overtime.” Some employees have
heard “work it but don’t record it.”
Where
overtime is not permitted, make clear that “No one is permitted to work any
overtime” as opposed to saying, “We cannot afford any overtime.”
Let
supervisors know that if they break the foregoing rule, they will be subject to
discipline up to and including discharge.
Carry a big stick. Let supervisors know
that if they require, encourage or even suggest that an employee work off the
clock, they will be subject to discipline up to and including discharge. This
prohibition will help prove that deviations were those of a rogue supervisor
and not part of an established corporate culture.
Make clear
that among the most serious violations would be altering an employee’s time to
reduce the amount owed to him or her to stay within budget. Almost always, such
“wage theft” should result in immediate discharge.
Don’t go it alone. Train supervisors to
report incidences to HR if they know, or have reason to know, that an employee
may have worked off the clock, even if the employee has not said anything.
In
harassment cases, it is not enough to avoid objectionable conduct. If employers
have actual or constructive knowledge of it and ignore it, they are condoning
it. Doing nothing is not a defense; it is an admission.
The same
principle has been adopted in the wage and hour context. Even if employers
don’t require, encourage or suggest that an employee work off the clock,
employers cannot allow it if they have reason to believe it may have occurred.
Supervisors
need training on the obligation to report to HR potential off-the-clock work so
that HR professionals can talk with the employee and determine whether and what
is owed to him or her. If there is a pattern of working extra hours without
permission, this may be cause for discipline of the employee, but the employee
almost always should be paid.
Clear Policies
Don’t leave
employees guessing about the organization’s policy on off-the-clock work. Spell
out the employer’s make it clear that off-the-clock work is not permitted and
that there may be disciplinary action for it. That said, set up a process encouraging
employees to report off-the-clock work to HR without fear of retaliation.
Pay up. Develop a procedure HR
professionals can use when they speak with employees who report off-the-clock
work.
Use the
procedure to determine if they are telling the truth, and then make sure they
are properly paid.
If a
supervisor reports that an employee has or may have worked off the clock, an HR
professional should contact the employee. HR needs to determine whether the
employee performed any off-the-clock work and how much time is involved. An
appropriate adjustment must be made.
Sometimes,
HR professionals make the mistake of assuming that no money is owed as long as
the employee does not go over 40 hours in a workweek or eight hours in a day in
California.
Payment may be owed for off-the-clock work, even if the employee does not
become eligible for overtime.
For
example, assume that an employee is paid a salary for working 35 hours for a
workweek. If the employee works additional hours but is short of 40, the employee
generally must be paid for the “gap time.”
Be specific. Develop a policy that
prohibits off-the-clock work. Leave no doubt that employees must record all
time worked.
Make clear
that you will not tolerate any off-the-clock work and that all work must be on
the clock.
A general
rule is not enough. Spell it out. For example:
- An
employee may not do any work before clocking in, and, if he or she does,
management must be contacted to override the start time so that he or she will
be paid for all time worked.
- An employee may not do any work after
clocking out, and, if he or she does, management must be contacted to override
the stop time so that he or she will be paid for all time worked.
Have an open-door policy. Develop a
complaint procedure with appropriate assurances of non-retaliation so that
employees can report concerns without fear of retribution. There must be a
strong policy and a robust complaint procedure. Contacting their supervisors
should not be employees’ only option. After all, supervisors often are the
perceived perpetrators.
At a
minimum, employees should be given the option of speaking with HR as an
alternative. Employers may want to go one step further and provide another
option outside of HR, just in case the problem employee works for HR.
Of course,
the policy should prohibit retaliation, which should be defined broadly. If
employees don’t feel comfortable raising their concern in-house, they could
consult with a plaintiffs’ lawyer and you could end up in court.
Automated Backup
Technology
can be HR’s friend or foe in preventing off-the-clock work. On the one hand,
time-keeping systems may be adjusted to provide HR with notifications about
interrupted meal breaks or other off-the-clock work.
While
technology may facilitate tele-work, however, telecommuting poses unique
compliance risks to employers, particularly regarding their nonexempt
employees.
Tweak time-keeping system. Determine
whether questions should be included in your time-keeping system that ask
employees if they have done work off the clock, so that you can follow up with
the employees, capture any time worked but not recorded, and then pay them for
it.
Most
employees are honest, but some are not. How do you protect yourself against
those who may claim later that they worked hours off the clock but then bring
bad-faith claims?
Most modern
time-keeping vehicles include the potential for questions at the beginning or
end of each shift. The answers may be helpful in ensuring that employees are
paid in real time, as they should be, and in defending against false claims.
For
example, at the beginning of every shift, employees can be asked before they
clock in if they have done any work since they clocked out on their last shift.
If they answer yes, HR should receive notification and speak with the
employees.
Similarly,
at the end of the day, ask a question about the employee’s meal break, such as
“Did you enjoy an uninterrupted meal break of 30 consecutive minutes?” If the
answer is no, either HR would be contacted to determine if payment is owed or the
unpaid meal break would be automatically converted to paid time.
If an
employee who responds affirmatively to the meal break query later claims that
he or she was interrupted almost every day but not paid, any subsequent
allegations are inconsistent with his or her prior answers, sometimes referred
to as attestations. This should weigh heavily against an employee’s
credibility.
Limit tele-work. Establish clear rules
about whether and when employees may work remotely, such as checking e-mail,
and how to ensure that time is properly documented and paid.
Sometimes
it is your hardest-working employees who can cause trouble in this area because
they log in at all hours and perform work. While their intentions are likely
noble, you could pay a handsome price for such dedication.
Set
boundaries for remote work, even for stellar employees. For example, you could
block remote access to your network by nonexempt employees. Or, you could allow
access only if approved and provide guidance on how to record the time to
ensure proper payment.
A similar
issue arises with personal digital assistants. The safest policy legally is to
deny your nonexempt employees smartphones, BlackBerry devices and the like. But
is that smart from a business perspective?
There may
be times when nonexempt employees need these devices, so set limits as to when
they can use the devices and pay them appropriately.
For
example, you might set a specific block of time outside of working hours when a
marketing employee away on business can use his or her BlackBerry. If you allow
such periodic use, under the continuous day rule your duty to pay could be
continuous, too.
Even if you
have not developed specific policies yet, if you have reason to know an
employee may have done work remotely, you must speak with the employee and pay
him or her accordingly.
To
illustrate this point: A client forwarded me an e-mail from her assistant
regarding information that we needed to respond to a U.S. Equal Employment
Opportunity Commission charge. The message was “Good news. See below.”
My
response: “Not really. See when your nonexempt assistant sent it to you!”