On August 24, 2020, the U.S. Department of Labor’s Wage and Hour Division issued a Field Assistance Bulletin that provides guidance on employers’ obligation under the Fair Labor Standards Act (“FLSA”) to track remote employees’ compensable hours of work.  Although the guidance does not establish any new standards for remote employees, and instead relies on established wage and hour principles, it provides helpful and practical guidance for employers.  Given the prevalence of remote work and the significant liability that can result from a wage and hour claim alleging that non-exempt employees worked even a small amount of time beyond their scheduled working hours, all employers with remote, non-exempt employees should review the guidance and consult with their employment counsel to review and update their timekeeping policies and practices.

The guidance is rooted in what has long been a fundamental principle under the FLSA (and state wage and hour laws) – employers are required to pay employees for all hours worked, including additional, unscheduled hours of which the employer had actual or constructive knowledge.  That principle applies equally to work performed remotely, away from the employer’s worksite.  Employers are required to exercise control over their employees to ensure that work is not performed that they do not wish to be performed.  When an employee works hours beyond what an employer wishes or has authorized, the proper response is to discipline the employee, but pay for all of the time worked.

In assessing whether an employer has constructive knowledge of hours worked by a remote employee, the appropriate inquiry is whether the employer should have acquired knowledge of the hours worked through reasonable diligence, such as by providing a procedure for employees to report unscheduled time and then be paid for any such time.  An employer is not required to “pay for work it did not know about, and had no reason to know about.”

Significantly, the guidance does not seek to impose an onerous burden on employers to conduct time-consuming investigations to ensure that employees have properly reported all of their working time (e.g., by cross-referencing an employee’s phone records or email activity):

[I]f an employee fails to report unscheduled hours worked through such a procedure, the employer is generally not required to investigate further to uncover unreported hours. Though an employer may have access to non-payroll records of employees’ activities, such as records showing employees accessing their work-issued electronic devices outside of reported hours, reasonable diligence generally does not require the employer to undertake impractical efforts such as sorting through this information to determine whether its employees worked hours beyond what they reported.

While the Department of Labor’s guidance adheres to a practical, common-sense approach to this issue, employers should ensure they have appropriate time reporting procedures in place to help insulate them from a potentially-costly wage and hour claim.

If you have any questions regarding this guidance or any other labor and employment issues, please contact William Tarnow or your Neal Gerber Eisenberg attorney.

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