On August 24, 2020, the U.S. Department of Labor (“DOL”) issued Field Assistance Bulletin No. 2020-5 (“FAB 2020-5” or the “Bulletin”) in an effort to guide an increasing number of employers faced with the challenge of tracking compensable hours worked by teleworking non-exempt employees.  Specifically, FAB 2020-5 offers clarity regarding how, and to what extent, employers must monitor the number of hours worked by non-exempt employees who work remotely.  As many workforces seem poised to continue partial or complete telework for the balance of the year, FAB 2020-5 provides useful insight to assist employers in properly monitoring remote hours and avoiding liability for unpaid wages.

FLSA Compensation Requirements for Unscheduled Work

The Bulletin affirms the Fair Labor Standards Act’s (“FLSA”) requirement that employers compensate employees for all hours worked, including work that is “not requested, but suffered or permitted,” regardless of whether the work takes place on the employer’s premises or elsewhere.  If an employer “knows or has reason to believe that the work is being performed, [it] must count the time as hours worked.”  Under the FLSA, it is the employer’s obligation to exercise control to ensure that work it does not wish to be performed is not undertaken.  FAB 2020-5 upholds this obligation, adding that “[e]mployers must . . .pay for all work they know about, even if they did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work.”

The Bulletin also confirms the longstanding rule that an employer cannot avoid payment obligations for unapproved work by simply issuing a rule banning it; instead, it “must make every effort to enforce” that rule.  However, as FAB 2020-5 also notes, an employer’s obligation to prevent unscheduled work is not “boundless,” and that an employer may not be obligated to compensate non-exempt employees for hours worked that it had no actual or constructive knowledge of and thus no opportunity to prevent.  Under the FLSA, an employer may have “constructive” knowledge of unscheduled hours worked if the employer “should have acquired knowledge of such hours through reasonable diligence.”

FAB 2020-5’s Guidance

FAB 2020-5 suggests that one way employers might exercise such “reasonable diligence” for teleworking employees is to establish a “reasonable process” for employees to report uncompensated work time, without implicitly or overtly discouraging accurate employee reporting.  Importantly, the Bulletin states that if employees fail to use this process to report unscheduled hours, employers are not obligated to undertake further investigation to “uncover” unreported hours.  For example, employers with a method for reporting unpaid work are not required to additionally search teleworking employee log-on records or email timestamps in order to suss out unscheduled and unreported work hours.  Instead, as FAB 2020-5 notes, an employee’s failure to follow reasonable procedures for reporting unscheduled time “thwarts” an employer’s ability to prevent unwanted work, and the employer’s failure to compensate the employee for that time does not violate the FLSA.

With the Bulletin’s guidance in mind, employers should make sure to consider the following key takeaways while managing a remote non-exempt workforce:

  • Remember that employers are required to track and pay for hours worked by those employees regardless of where it occurs.
  • Employers should investigate and address instances of unauthorized work, though employers must be sure to follow FAB 2020-5’s guidance and compensate employees for all hours worked (even unwanted hours) that they do or should know about. Non-exempt employees who repeatedly work without permission may potentially be disciplined, but they generally may not be unpaid.
  • While remote workforce creates unique challenges, employers are well-served to protect themselves by implementing processes to ensure prompt and accurate reporting of all hours worked, including unscheduled time, for all employees.

As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules.  This is not an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand.  This article does not address other the potential impacts of the numerous other local, state and federal orders that have been issued in response to the COVID-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay and other issues.

Sheppard Mullin is committed to providing employers with updated information regarding COVID-19 and its impact on the workplace.  Stay informed on legal implications with Sheppard Mullin’s Coronavirus Insights Portal which now aggregates the firm’s various COVID-19 blog posts.