Pay Up You Deadbeat: Compensating Nonexempt Remote Teleworkers for All Hours Worked At Any Prevailing Wages and Overtime Rates!

As you all know, first prize is a Cadillac El Dorado. Anyone wanna see second prize? Second prize is a set of steak knives. Third prize is you're fired. Get the picture?”

-The character Blake in the movie Glengarry Glen Ross.

Now for part three of our so-called three blog night series focusing on remote workers. Back in the day when I sent holiday presents to clients, before the ethical restrictions and policies of employers made those gifts problematic, I once sent out a “lawyer doll” with three prerecorded messages including: “Pay up you deadbeat…. My client is innocent…. I‘ll see you in court.” When it comes to remote employees, the employer must pay for all hours worked, yet has less control over the amount of working time. If they don’t pay, they are deemed deadbeats.

Plenty of U.S. Government services contractors as well as many private sector employers have significant number of remote or teleworkers. The pandemic led to a shift in workplace practices. That shift has proved sticky. Employers save money on leasing space and other costs associated with real property.  Hiring remote workers  in a virtual office set-up thus makes dollars and cents. But it also exposes the employer to unknown wage and hour risks.

Employers are required to pay nonexempt employees for all hours suffered or permitted to work. U.S Government service contractors must also meet prevailing wage and fringe benefit requirements for all hours worked. And federal and state overtime laws kick in when workers work more than 40 hours a work week, and in some states even more situations. Yet when nonexempt employees work remotely, it becomes much harder to  supervise and control the hours of work.  Remote workers by definition are remotely supervised. They may end up working less hours or being less productive than the employer wants but reporting more hours. Or they may end up working more hours than the employer wants, and thus reporting unbudgeted and unbillable working time. If you don’t want to pay for this time, then don’t have remote workers, because this is going to happen just as surely as the sun is going to rise tomorrow morning.

The employer is not allowed, at least unilaterally, under either the Fair Labor Standards Act (“FLSA”) or the Service Contract Act (SCA”) or other Federal or State wage laws to fix an arbitrary amount of hours it will pay for.  Employers cannot simply pay workers only for their 8-hour scheduled shift. Additional time employees needed to perform requisite services such as calling into the employers call center, or loading the employer’s software, or accessing employer’s files, or other time spent remotely, including attending virtual meetings which start before the workday or last after the regularly scheduled workday, or interrupted meal breaks, training time, or other periods of ostensibly nonworking time, may all be compensable working time. Federal law requires employers to include all hours employees worked in their payroll reports and to pay an overtime premium for hours over 40 in a workweek.

Working out of schedule thus can lead to very large back wage numbers. Some of DOL’s largest cases have been claims of off the clock work. Just for example, in May of 2023, DOL trumpeted a $22 million dollar jury verdict it won in a case involving a company called East Penn, which is one of the e world’s largest battery manufacturing companies. As DOL said in its press release,

“Decades of settled law states [sic] that employers must pay employees for all hours worked, and this includes the time employees spend changing into and out of uniforms and showering where such activities, as here, were necessary and indispensable to their work. Contrary to the law, East Penn allowed employees to work off-the-clock for years,” said Solicitor of Labor Seema Nanda. “The jury’s verdict will go a long way towards making the employees whole and serves as a stark reminder for employers like East Penn to think twice before instituting policies designed to skirt the law.”

https://www.dol.gov/newsroom/releases/whd/whd20230510. And DOL was set to go further by seeking an equal amount of liquidated damages.  (i.e., another $22M). Allowing employees to work off the clock yet refusing to pay them is considered the original sin by DOL.

Remote work is particularly susceptible to off the clock claims. After all, out of sight, without effective supervision, workers can be suffered or permitted to work practically indefinitely. Of course, employers can use software to electronically monitor productivity, measuring key strokes and mouse movement. But just go to the Amazon Marketplace and you will see there are inexpensive devices for sale to randomly hit keys and move the mouse. The technological war ranges on in the workplace. And, also predictably, some overzealous supervisors will encourage employees to work harder or even demand off the clock work. Thus, timekeeping for nonexempt remote workers is very important. And the timekeeping records must be accurate and not coerced by the employer. Just recording and paying for the standard 8 hour workday will not cut it. Remote workers must be allowed to record their real hours of work, and employers need to take those timekeeping records seriously and pay for extra overtime worked. Indeed, DOL  has issued  “reasonable diligence” requirements  and guidance to monitoring teleworkers.  See https://www.awrcounsel.com/blog/2020/10/13/keeping-track-of-time-dol-issues-reasonable-diligence-guidance-for-monitoring-teleworking-hours?rq=telework%20.

In the East Penn case, DOL asserted that:

Volumes of employer time records that showed East Penn did not pay employees based on their actual clock-in and clock-out times. The records also showed how the company would adjust times to pay employees only for their scheduled shift, and how East Penn did this every day and for every employee. 

Id. Accordingly, invest some time proactively installing a reliable time keeping system for remote teleworkers. And be generous as to what constitutes working time. Don’t  think you can just schedule workers for 8 hour workdays. Allow workers to report additional time worked as “exceptions” and pay for it. Those occasional exceptions validate your time keeping system. Don’t get “East Penned.” It is even more likely to happen with remote workers.