On August 24th, the Department of Labor issued a Field Assistance Bulletin (“FAB”), available here, regarding “Employers’ obligation to exercise reasonable diligence in tracking teleworking employees’ hours of work.” While FABs are not legally binding authority, they provide guidance on the WHD’s enforcement positions and policies. This recent FAB is useful in suggesting best practices for those charged with ensuring that employees are paid for all hours worked—a task that has been made much more difficult by the current remote work environment.
Starting with the general legal requirement that employers must pay employees for all hours worked that the employer “suffered or permitted,” even if such work was not required or requested, the FAB considers the efforts that may be required of an employer to determine whether employees worked hours that they did not report to the employer.
Recognizing that an employer’s potential liability for such hours worked turns on the employer’s actual or constructive knowledge, obtained through reasonable diligence, that an employee performed services that were not reported, the FAB instructs that policies and time reporting processes informing employees of the need to report all hours worked are insufficient if the process does not provide a reasonable means of reporting non-scheduled time and paying for all hours worked, or if the employer prevents or discourages employees from accurately reporting time worked. Where such policies and processes are in place, however, and the employer does not prevent employees from using such processes to be paid for all hours worked, employers are “not required to investigate further to uncover unreported hours.” This guidance is especially important in the context of many remote work environments, where electronic records reflecting an employee’s login/logout times on a computer or to a company’s network could support a claim that the employee is working more hours than the time reported to the employer and that the employer should have been aware of this fact through a review of all such records. Citing relevant case law, the FAB instructs that “[t]he reasonable diligence standard asks what the employer should have known, not what ‘it could have known.'”
Whether applied to a remote work environment or the more traditional at-worksite situation, the FAB is helpful to all employers in identifying various best practices with respect to tracking hours worked and paying employees for all such hours, whether or not the work was requested or required. As a starting point, all employers should have a policy that includes certain key instructions to employees regarding reporting/recording of hours worked and their related obligations. Employers must then review and revise time reporting/recording procedures, as appropriate, to ensure that employees are able to report all hours worked. If, for example, employees are required to punch in using a time clock, but the time clock is in a building that is not unlocked until a time after many employees have already started working, the employer should take steps to remedy this situation. After the policy has been prepared and the system or process has been reviewed, employers should conduct periodic training for both non-managerial employees and managerial employees regarding the policy, the process and their obligations with respect to both. Finally, it is recommended that periodic audits be performed with respect to common “red flag” issues related to time reporting/recording and the compensation correction process.
In defending claims against employers seeking pay for hours worked but not paid, employers are routinely faced with employee allegations that an employer’s process doesn’t allow for the reporting/recording of all hours worked, that supervisors discourage them from accurately reporting/recording all hours worked and/or that the employer ignores information regarding the need to correct pay. The best policies, processes, training and audits cannot prevent such allegations, but such efforts, particularly where accompanied with examples of corrected time records and paychecks demonstrating the effectiveness of the efforts and the employer’s attitude toward ensuring that all employees are properly paid, will present the best defense to these types of claims.
If you have any questions regarding the new FAB, or if you would like to discuss policies, processes, training and/or audits related to these issues—both for your remote and on-site workforce—please contact Ray Bissmeyer or your Dykema relationship attorney.