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An Employer’s Guide to Telling Time – A Brief Explanation Of Which Hours Must Be Counted When Determining Overtime Eligibility

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An Employer’s Guide to Telling Time – A Brief Explanation Of Which Hours Must Be Counted When Determining Overtime Eligibility

Employers are frequently cautioned to review positions classified as exempt to ensure they have not misclassified a non-exempt employee, which could result in significant overtime exposure.  An issue that receives much less attention, but which can also result in substantial overtime exposure, is the failure to pay non-exempt employees for all hours worked in a work week. Under the Federal Fair Labor Standards Act (“FLSA”), non-exempt employees must be paid the minimum wage for all hours worked in a work week and must be paid overtime at the rate of 1.5 times the employee’s regular rate of pay for all hours worked in excess of 40 hours in a work week. Some states go further, requiring overtime for hours worked in excess of eight (8) hours a day or for work performed on the sixth and seventh day worked in a work week).

The following is a discussion of what hours must be included in the determination of whether a non-exempt employee worked more than forty (40) hours in a work week.

A.        Preliminary and Postliminary Activities

Job-related activities required as a part of an employee’s work are covered, even if they are performed before or after the employee’s specified work schedule. For example, preliminary and postliminary activities such as filling out time, material or requisition sheets, checking job locations, removing trash, and fueling cars are compensable work if done at the employer’s behest and for the employer’s benefit. Time spent changing into or out of work clothes, if required by the nature of work, must be counted as hours of work.

B.        Waiting Time

Employees who wait before starting their duties because they arrived at the place of employment earlier than the required time are not entitled to be paid for the waiting time. However, if an employee reports at the required time and then waits because there is no work to start on, the waiting time is compensable work time.

C.        Stand-by Time

Workers required to stand by their posts ready for duty, whether during lunch periods, during machinery breakdowns or during other temporary work shut-downs, must be paid for this time. Such periods are usually of short duration, and their occurrence is not predictable. If the employee is under the control of the employer during these periods, and is not able to use the time for his or her own purposes, this is working time.

D.        On-Call Time

On-call time is time spent by employees, usually off the working premises, in their own pursuits where the employee must remain available to be called back to work on short notice if the need arises. The FLSA requires employers to compensate workers for on-call time when such time is spent “predominantly for the employer’s benefit.”  An employee who is required to remain on call on the employer’s premises or so close to the employer’s premises that he cannot use the time effectively for his own purposes is working while ‘on call.’ An employee who is not required to remain on the employer’s premises but is merely required to leave word at his home or with company officials where he may be reached is not working while on call.

E.        Break Periods

Break periods under the FLSA, such as meal periods or rest periods, may or may not be compensable, depending in large part on whether the employee is relieved from duty and the amount of time that the employer gives for the activity.

1.        Bona Fide Meal Periods

A bona fide meal period of sufficient duration, when the employee is completely relieved from duty, is not work time.  Meal periods must be counted as hours worked unless:  (a) the meal period generally is at least 30 minutes; (b) the employee is completely relieved of all duties during the period — if, for example, the employee must sit at a desk and is answering the telephone during the break, the time would be compensable; and (c) the employee is free to leave the duty post (there is no requirement, however, that the employee be allowed to leave the premises or work site).

2.        Rest Periods

According to the DOL, rest periods of short duration – from five to 20 minutes – must be counted as hours worked.

F.        Unauthorized or Unassigned Work

Employees who, with the knowledge or acquiescence of their employer, start work before their shift starts, work through unpaid breaks or continue to work after their shift is over, albeit voluntarily, are engaged in work time. The reason for the work is immaterial; as long as the employer "suffers or permits" employees to work on its behalf, the hours must be counted.

Management must make certain that regular work time and overtime work that it does not want performed is not, in fact, performed.  Mere promulgation of a rule to that effect is not sufficient.

Employers should review their payroll policies and practices to ensure that all hours worked are accounted for and that supervisors are aware of what hours must be counted as work time.