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Remote Work During COVID-19: How to Ensure Proper Pay Practices

Many employees are working remotely due to the COVID-19 pandemic and government orders restricting travel and normal workplace operations. Because remote employees aren't clocking in and out at the employer's physical premises, it's increasingly important for employers to ensure that their timekeeping and pay practices comply with federal, state, and local requirements.

The U.S. Department of Labor (DOL) has recently published guidance (Field Assistance Bulletin 2020-5) that addresses federal rules for paying remote workers. While the guidance doesn't carry the same weight as a regulation or law, it demonstrates how the DOL intends to enforce federal wage and hour requirements. Below are four key takeaways from the guidance.

Background:

The federal Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees for all hours worked. As such, employers have an obligation to track the number of hours of work performed by these employees. When non-exempt employees work from home it can be more complicated to ensure that they are properly tracking all time spent working.

Recent DOL Guidance:

#1: Pay required even if work wasn't requested/approved

In the DOL's recent guidance, the agency reiterated that employers must pay for all hours worked, including hours not requested but "suffered or permitted" to be worked, including work performed at home. If you know or have reason to believe that work is being performed, the time must be counted as hours worked, according to the DOL. The FLSA places a significant burden on employers that are deemed to have "actual or constructive knowledge of additional unscheduled hours worked by their employees." See example in #2 below.

#2: Rules prohibiting unscheduled work aren't enough

According to the DOL, merely having a rule prohibiting unscheduled or unauthorized work isn't enough. Employers should also establish a reasonable process for an employee to report unscheduled work time. However, you can't discourage or impede accurate reporting under this process and must train employees on how to properly report such time.

If such a system is made available, and an employee fails to report unscheduled hours worked, the employer is generally not required to investigate further to uncover unreported hours, according to the DOL. For instance, although "an employer may have access to non-payroll records of employees' activities, such as records showing employees accessing their work-issued electronic devices outside of reported hours, reasonable diligence generally doesn't require the employer to undertake impractical efforts such as sorting through this information to determine whether its employees worked hours beyond what they reported."

In a footnote, though, the DOL states this is not to say that consultation of records outside of the employer's timekeeping procedure may never be relevant. Depending on the circumstances, it could be practical to consult such records. If so, those records would form the basis of constructive knowledge of hours worked.

Example: The guidance doesn't give a specific example, but let's say an employer receives a project from an employee via email after the employee's normal work hours and the employee hasn't reported any additional time worked. In this case, the employer should investigate further to determine if the employee worked past 5 PM or there is some other explanation (e.g., the employee was done by 5 PM but scheduled the email to deliver after that time).

#3: Action needed to demonstrate FLSA compliance

Employers should take action to appropriately obtain and account for unscheduled time worked, such as:

  • Set up a reasonable process for employees to report unscheduled hours worked and then compensate employees for all reported work hours, whether or not the hours were requested/approved by the employer.
  • Clearly communicate any rules and procedures related to unscheduled work time. Consider drafting and communicating rules requiring employees to report all hours worked, expressly prohibit off-the-clock work, and require employees to review and confirm their work hours at the end of each pay period and report any discrepancies if necessary.
  • Train employees on how to use the company's timekeeping and reporting system and ensure that access to the system is not impeded or discouraged.

For additional information, see the Field Assistance Bulletin 2020-5.

#4: Consider impact on outside sales exemption

Due to the continuing restrictions related to the COVID-19 pandemic, some employers may need to evaluate whether employee exemptions from minimum wage and/or overtime under the FLSA and similar state laws remain valid for certain employees, notably outside sales employees.

According to DOL Fact Sheet 17F, to be exempt from overtime, an outside sales employee's primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities, and the employee must be customarily and regularly engaged in work away from the employer's places of business.

Generally, outside sales doesn't include sales made by mail, telephone, or the Internet unless such contact is used merely in addition to in-person calls. "Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephonic solicitation of sales is considered one of the employer's places of business, even though the employer isn't in any formal sense the owner or tenant of the property."

To the extent that outside salespersons have generally not been making regular visits to customers, trade shows, and similar events due to COVID-19 restrictions, you may want to seek appropriate legal counsel to determine whether their exempt status remains valid.

Conclusion:

Employers with remote or outside sales employees may need to ensure that their pay and timekeeping practices remain valid in this environment. Employers may also be subject to state and local requirements that may provide greater protection to employees. Review all requirements applicable to your business to ensure compliance.

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