The COVID-19 pandemic has ushered in a wave of new teleworkers. This shift in the way employers conduct business brings new challenges as they seek to comply with the Fair Labor Standards Act (FLSA) requirement of paying employees for all hours worked. In response, the Department of Labor released Field Assistance Bulletin No. 2020-5 (FAB 2020-5) to provide additional guidance for complying with FLSA regulations and reducing liability. As clarified in FAB 2020-5, employers may be required to pay nonexempt employees for work completed at home, even if the work was completed without the employers’ knowledge.
Fair Labor Standards Act and Paying Employees
The FLSA requires employers to pay nonexempt employees for all of the work they perform. Nonexempt employees are typically employees who are paid on an hourly basis and are eligible for overtime pay. The scope of nonexempt work covered extends beyond the work required by the employer. It also includes “work not requested but suffered or permitted.” Moreover, federal guidelines state that an employer must compensate nonexempt employees for work that the employer knows about or “has reason to believe” is being performed. This requirement stems from the idea that employers should control employees’ work as well as the work employers do not want completed.
It is presumed that an employer knows about the work being completed during scheduled work times. However, an employer’s challenge is to identify the work the employer has reason to believe is being performed. Current law attempts to clarify this requirement by stating that an employer has reason to believe work is happening if the employer can discover this information through reasonable diligence. This clarification means that employers must exercise reasonable diligence to find out how much employees are working. In an effort to avoid this reasonable diligence requirement, an employer may simply create an internal rule that employees are not allowed to work beyond the required hours. However, this rule alone will not be sufficient to alleviate the responsibility to exercise reasonable diligence.
FAB 2020-5 and Establishing Processes
FAB 2020-5 identifies what the federal government considers a reasonable and acceptable way to establish what an employer has reason to believe or know. Essentially, enforcing “a reasonable process for an employee to report uncompensated work time” provides an employer with an opportunity to gather information about additional work the employee is completing. This system is incredibly valuable, especially if employers now have remote employees and cannot monitor or control their time spent working as readily as before.
The establishment of a reasonable process for reporting constitutes reasonable diligence under FAB 2020-5. An employer is not required to go beyond providing a method for reporting. If an employee chooses not to disclose additional hours worked, an employer will not be responsible for paying for those hours worked—unless the employer discouraged or prevented truthful reporting. Although employers are required to exercise reasonable diligence, they are not required “to undertake impractical efforts” like sifting through reports and documents to discover timestamps and other clues regarding an employee’s time spent doing additional work. If employers create and enforce proper reporting processes but employees choose not to comply, those employees are standing in the way of their own ability to receive compensation for the time they spent working.