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Author: Tom Shumaker, Esq.

May 20, 2020   


The COVID-19 pandemic catapulted many employees into working from home (sometimes called “telework”). Employers and employees alike need to understand that the overtime laws apply to telework, just as much as they apply in the traditional office environment. Compliance with the federal Fair Labor Standards Act of 1938 (“FLSA”) is especially difficult when employees work from home, and indeed can work anywhere, at any time, with little supervision. For employers, it is important to update their work rules/policies on overtime.  And for employees, it is important to maintain and keep detailed records of all time worked.  


The most common mistake employers make in overtime compliance is to assume that all office workers are exempt from overtime. According to the new U.S. Department of Labor overtime regulations that went into effect on January 1, 2020, an employee is not considered a “white-collar” exempt member of management if he or she is paid less than $35,568 per year.1 Thus, if employers have employees earning less than $35,568/year who are teleworking full-time or part-time, the following recommendations are offered to avoid running afoul of the FLSA:


• Publish a rule on timekeeping processes and employees’ obligation to document all time worked. The FLSA does not allow overtime pay to be waived in an employment contract or work-rule. Likewise, employees cannot volunteer or agree to work “off-the-clock” to complete an unfinished project.


• Ensure the rule clearly defines “time worked” with examples, such as: If an employee is eating lunch while answering emails, that counts as “time worked” and not as a lunch break. Similarly, if the employee is working from home on weekends, trying to catch up on projects, that also counts as “time worked.” But if an employee is simply thinking about work during off-hours, that does not count as “time worked.”


• Consider prohibiting employees from teleworking beyond 6 p.m. 


• Require employees to submit regular time reports. 


• Train employees on your new teleworking rules and require them to acknowledge receipt of the new rule in writing. 


• Promptly review all time reports. 


• Discipline employees who failed to submit timely, detailed time reports or who work overtime without prior approval. Use a progressive discipline process, starting with a written warning; and


• Most importantly, pay overtime if a time report shows it is owed, even if the employee failed to obtain advance permission to work overtime and even if the company has a “no-overtime” policy. 


An employee can bring a failure-to-pay overtime lawsuit within two (and in some cases three) years after the fact. The Wage and Hour Division (WHD) of the Department of Labor (DOL) enforces the FLSA and reports that $2 billion was reclaimed from employers —and 83 percent of that comes from overtime violations. “A steep 79 percent of the cases pursued by the DOL for wage and hours infractions resulted in back wages being awarded to employees. In other words, once the DOL has decided to pursue an investigation or legal action, the odds are high they’ll succeed. Meaning you’re likely to pay back wages, civil penalties, and legal fees — your own and your employee’s.”2  Even if you “win” or settle out of court, expect to spend excess time and money. Business owners are wise to head off legal actions by ensuring they understand the potential pitfalls and take preventative measures by consulting an experienced attorney to review their work rules.


If you have questions about state or federal wage and hours laws or want assistance writing work rules or employee handbooks, labor and employment attorney Tom Shumaker, Esq. of the Ernest Law Group has 25+ years of Labor and Employment law and litigation experience and provides practical, creative, and cost-effective counsel. To contact Tom, call Ernest Law Group at (757) 289-2499.


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1.  This salary threshold is only one of three requirements employees must meet for FLSA exemption. Employees must also: 1) be paid a fixed salary that cannot go up or down based on the quantity—or quality—of their work and 2) perform duties of an executive, administrative, or professional nature. Employers will be allowed to count non-discretionary bonuses, incentives, and commissions as up to 10% of the salary threshold of $684 per week, so long as such bonuses are paid at least annually. In addition, there are other rules relating to some farmworkers, drivers, mechanics, commissioned employees, seasonal employees, interns and volunteers and recreational employees.

2. Quicken. https://www.tsheets.com

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