Thursday, May 11, 2017

What’s Compensable?

The Fair Labor Standards Act has made plenty of news recently, but most of the attention has been focused on who qualifies for overtime.  For much of 2016, it looked like new federal regulations would require that anyone making less than $47,476 per year would be non-exempt and would qualify for overtime.  That ended with a federal court injunction in late 2016 and the new administration’s equivocation on the regulatory change. For now, workers qualify for overtime if they make $23,660 or less per year.  Workers who make more than $23,660 per year may not qualify for overtime if they fit within the executive, administrative, professional, computer, or outside sales exemptions set out in the FLSA. 
 
Even though the proposed big change in overtime eligibility failed to materialize, FLSA compliance is a challenge for employers and should remain front and center for HR professionals, business owners, and in-house counsel.  One of the most difficult aspects of compliance is understanding what time needs to be paid for. The question of what time is compensable becomes even more complex as workers use and rely on technology and remote electronic communication. We know that non-exempt employees must be paid for all time worked and paid time and a half when they exceed 40 hours in a workweek. (Note that state requirements may vary.) With that basic rule in mind, here are examples of how employers should treat time worked that falls outside employees’ standard “on the clock” hours.
 
  • Pre-shift and post shift work.
 
Time that an employee spends immediately before or after work may not be considered compensable hours worked even if spent at the employer’s premises. Unless a contract or industry custom or practice identifies such activities as compensable time, preliminary and postliminary activities are generally not compensable. 
 
For example, an employer is not required to compensate employees for time spent “changing clothes.” In Sandifer v. U.S. Steel Corp., the Supreme Court held that the FLSA’s reference to clothes encompasses protective gear necessary for job performance, so an employee does not need to be compensated for time spent donning and doffing protective gear. 
 
In Integrity Staffing Solutions, Inc. v. Busket al., the Supreme Court held that time employees spend waiting to undergo and actually undergoing security screenings after work each day is not compensable time.
 
  • On-call and waiting time. In some circumstances, an employee must be compensated even for periods of inactivity during work time. For example, a call center worker who reads a book between calls is working while waiting for the phone to ring. The employee is “engaged to wait.”

    Time an employee spends “on call” at the place of employment is compensable, but the time an employee spends “on call” while at home or elsewhere is generally not compensable work time, unless the employee is otherwise working.
     
  • Rest and meal periods. Short rest and meal periods—20 minutes or fewer—are generally considered compensable working time. But if an employee takes lunch at her desk while answering phones or responding to a supervisor’s requests for help, that time is working time and is compensable.  A bona fide meal period of longer duration is generally not compensated as work time as long as the employee is completely relieved of work duties for the purpose of eating the meal.
     
  • Training time.  Time that non-exempt employees spend in training (or at seminars, lectures, or meetings) is compensable if it is non-voluntary, happens during work hours, is job-related, or if job duties are performed during the training. However, a mandatory ten-day unpaid training program that occurred before the date of hire was found to be not compensable time under the FLSA and California law.
     
  • Travel time. Time spent traveling during normal working hours is compensable, but time spent commuting to and from work is generally not deemed compensable work time. Travel for work that extends an employee’s work day is usually compensable, but if an overnight trip is required, time spent in travel as a passenger that goes beyond the regular work day is not compensable.

  • Time spent reviewing or responding to emails or texts outside regular working hours. Even if reading or responding to texts or emails is not required by the employer, time spent doing so outside working hours will be compensable if the employer “suffers or permits” the practice.
 
There are other types of compensable time, of course, and other situations in which time isn’t compensable even if it appears to fit into one of the categories above.  Remember that employers are required to keep records of all compensable time, including time spent on email or text correspondence that occurs outside normal working hours.  
 
If unauthorized compensable time is a problem, there are steps an employer can take to limit it.  In addition to a clear policy prohibiting unauthorized overtime, employers can develop and enforce a policy prohibiting unauthorized work outside of normal hours.  Access to the employer’s email and data can be restricted outside working hours.  Supervisors and managers should be instructed to avoid emailing or texting hourly employees before or after the work day.  Although employers cannot avoid paying for compensable time that’s worked in violation of their policies, they can discipline employees for violations.
 
An understanding of these general guidelines is a good starting point, but employers may need to dig deeper, particularly if a large number of employees are affected.  As The Walt Disney Co. found out recently, the cost of non-compliance can be high. The Department of Labor announced in March that Disney would pay $3.8 million to resolve Florida minimum wage, overtime, and recordkeeping violations involving 16,400 Florida employees. 

Posted by Laura Bartlow