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Under the Fair Labor Standards Act (FLSA), employers are required to pay all nonexempt employees for all time worked within a workday. Additionally, employees may perform additional tasks outside of a workday that warrant compensation. As the workplace continues to evolve, employees are more often asked to report to a certain location or perform tasks outside of what is normally considered “work time.” Whether time spent in the course of this work falls into the definition of “hours worked,” and entitles an employee to compensation under the FLSA, largely depends on the fact-specific nature of those requirements. This article discusses common situations that employers currently face where there is ambiguity as to whether an employee is entitled to be compensated.
Employers may seek to improve employee performance by providing training or education to employees. To maximize worker output during the workday, these trainings might be provided during lunch breaks, or even at an employee’s home via the internet. In such instances, the U.S. Department of Labor (DOL) has issued four criteria that must be met in order for that training time to be exempt from compensation:
(1) Attendance is outside of the employee’s regular working hours;
(2) Attendance is in fact voluntary;
(3) The course, lecture, or meeting is not directly related to the employee’s job; and
(4) The employee does not perform any productive work during such attendance.
To be “voluntary,” the employee must not be led to believe that failure to attend the training or lecture would affect the terms and conditions of employment in any way. If the material covered by the training is designed to make the employee more efficient at his current job, then it is “directly related” to the job and is therefore compensable time. This would not be the case if the material instead provides a different set of skills than is required for the current job, even if the employee is being prepared for future advancement to a new position.
Some employers mistakenly believe that on-the-job training does not merit compensation, since the employee is not yet doing valuable work. However, this training is certainly voluntary and related to the employee’s job duties, and therefore must be compensated.
Unauthorized/ Unintended Work
Employees cannot be monitored at all times, even while they are at the worksite. It is quite possible for an employee to arrive to work before the scheduled workday, or stay for some time afterwards, in order to put more time into a project or assignment. Where employees work close to 40 hours per week, this extra time could push the employee’s time in excess of 40 hours, requiring that the employee be paid overtime under the FLSA. The question employers often encounter is whether they are required to pay for the time employees spend on work tasks when that time was not explicitly authorized by the employer.
Whether unauthorized time is compensable hinges on whether the employer had a reason to believe that work was being performed. This includes not only work performed at the worksite, but also work that may be performed at home. For example, if an employee has not finished an assignment at the end of a workday, but the employee reports for work the next day with the finished assignment, the employer may have reason to believe the assignment was completed at home. The employer is required by the FLSA to provide compensation for work performed at home, and overtime if applicable. The requirement would not be eliminated just because the employee could have or should have finished the assignment during the workday, but intentionally worked from home to receive the overtime payment.
Sometimes, after an employee has returned home from work, he or she may be asked to perform other, often trivial, tasks related to job duties. An employee who regularly responds to calls and e-mails from clients, for example, may be asked to send a reply to any messages received after the employee is home. A supervisor may send e-mails out to all staff at night time regarding business strategies, expecting employees to reply to, or at least read, the e-mail. These small tasks may add up to compensable work time. However, where very little time is spent, such as a few seconds to respond to an employer’s text message, the task would be considered “de minimis” and probably not compensable under federal standards.
Employers may protect themselves from unauthorized performance of work. Implementing and regularly enforcing a policy that forbids unauthorized work may deter future violations. Any time the employer truly does not wish work to be performed and has reason to believe an employee is engaged in that work, it has the legal duty to make every effort to prevent that work from being carried out. Sending work-related e-mail or phone messages after the work day has concluded could result in compensable time, and should be avoided whenever possible.
Mandated Attendance Where No Work Is Performed
The FLSA recognizes waiting to be compensable time if an employee is “engaged to wait,” rather than merely “waiting to be engaged.” If an office worker sends an e-mail and must wait ten minutes at a cubicle to receive a response and continue working, that employee was “engaged to wait.” An employee who arrives to work 30 minutes before the shift begins and finds that there is not yet any work to be performed would be “waiting to be engaged” and not entitled to compensation.
There are several tests used by courts to determine whether an employee is engaged to wait. The United States Court of Appeals for the Second Circuit (covering New York, Connecticut, and Vermont) requires compensation for waiting time that is:
(1) controlled or required by an employer,
(2) pursued necessarily and primarily for the employer’s benefit, and
(3) if performed outside the scheduled work time, an integral and indispensable part of the employee’s principal activities.
Generally, courts will find that the test is satisfied whenever the employee is unable to utilize the waiting time effectively for his or her own purposes. Brief periods of idle time or any other short, unpredictable periods of inactivity, even if the employee may leave the job site to engage in personal business, would still be compensable time. Rest periods of less than 20 minutes have been found to be compensable, whereas periods of 30 minutes in which an employee is entirely free of work duties have been found to be outside the bounds of worktime. It is possible for an employee to be on a meal break of 30 minutes, but is asked to perform a short task in that time, causing the entire break period to be compensable.
An increasingly common practice that largely remains a gray area of the compensable waiting time rules is to require employees to be “on call” to report to work during certain times of the day. Typically, employees have to remain within a certain radius of the workplace, capable of reporting to work within a certain time frame of being called. Just as with any other waiting time, time spent on call is compensable only if there are significant restrictions on how an employee may spend personal time, and if such time is free of very frequent interruptions.
New Jersey is one of several states to use of frequency of interruptions in the employee’s personal time in determining whether on-call time is time worked. Other states, including New York and California, place focus on the geographical restrictions on the employee and the mandatory response time upon being called into work.
For more information regarding New York State’s break laws, see New York Meal and Break Laws.
Reporting Time Pay
Some states require employees to be paid for a minimum number of hours if they report to work at a time required by the employer, but are subsequently relieved from their duties for the day before they are scheduled to be relieved. For example, an employee who drives to work for a scheduled shift, but is told to return home due to lack of work, would be entitled to reporting time. In New York, most employers are required to pay the lesser of four hours or the the length of the scheduled shift. California requires employers to pay the greater of two hours or half the scheduled workday. New Jersey, in contrast, requires only one hour of pay for each shift reported to.
Some major retail stores have begun a new system that requires employees to call before certain shifts to find out if they are actually needed for that shift or if they should remain home. This allows the employers to better match the level of staff with business needs and avoid overstaffing. New York State, however, is currently assessing whether this system applies to the reporting time law and whether compensation must be provided to the employees who “report in” via telephone.
Many employers commonly round the time worked to the nearest tenth or quarter hour. The DOL permits such rounding only if it does not tend to cause employees to be paid for less time than they actually work. Rounding practices are normally assumed to add time to an employee’s shift as often as time is subtracted, ultimately averaging out to the actual amount of time worked. For example, if an employer rounds the punch clock to the nearest 15 minutes, an employee who punches into work five minutes early will have his or her time rounded, reflecting that the employee showed up precisely on time. However, any time that the employee shows up to work five minutes late, the punch clock will still reflect that the employee was on time. In this way, the rounding system does not unfairly benefit the employer and is appropriate.
Just as employers should be diligent in determining the beginning and end of an employer’s workday, they should also be conscientious of whether or not any time spent by employees, including outside of work, may require compensation. Employers should take action any time they believe work may be performed without authorization and avoid work-related contact outside of work hours. Further, no time spent at work should be presumed non-compensable without first observing the guidelines provided by the law.