The percentage of companies that permit or encourage flexible work arrangements has grown a lot — to 77 percent, from 66 percent seven years earlier, according to a recent Families & Work Institute survey.
But in allowing these arrangements, some employers “may not be paying sufficient attention to the compliance implications of wage payment laws that may affect these arrangements,” warns Michael Abcarian, managing partner of a Dallas law office. It’s time to take a fresh look at how you or your human resource department is keeping tabs on employee hours.
Even without flexible work arrangements, employers need to pay attention to wage and hour compliance due to increasing Department of Labor (DOL) enforcement actions and litigation in this area. Last year the DOL put out a new timesheet app for smartphones to encourage workers to keep tabs on their hours (see picture in sidebar).
Fuel for Litigation?
“This information could prove invaluable during a Wage and Hour Division investigation when an employer failed to maintain accurate employment records,” the DOL stated at the time. One law firm warned its clients that the timesheet app “undoubtedly will add fuel to the wage and hour litigation fire sweeping across the country” which, the firm warned, “will not die down in the near future.”
Some important reminders and suggestions from Abcarian:
- It may be necessary to implement a more precise recordkeeping system to accommodate flexible work arrangements. “If not, small timekeeping errors may gradually accumulate,” leading to substantial liabilities for unpaid wages, penalties and legal fees, he warned.
- Not only managers but also employees may need to be trained or re-trained on proper timekeeping processes. Employees and supervisors who fail to follow strict timekeeping procedures should be disciplined.
- Remember that even if overtime work is optional for workers operating on flexible schedules, you are still obligated to track that time and pay overtime rates.
- Operate on the assumption that all employees are non-exempt and thus eligible for overtime pay, unless you have made an affirmative determination to the contrary.
Clarifying Exempt Status
Many employers falsely assume, Abcarian said, that the mere fact that an employee is paid a salary makes that person exempt from overtime pay requirements. It is not the form of pay, but the nature of the individual’s job duties, that determines exempt status, he added.
Another point of confusion among some employers, according to Abcarian: Whether employees who work overtime despite instructions from their supervisor to the contrary must be paid overtime wages. The answer is yes. However, employers are within their rights to discipline workers who do so. Actions can range from a tongue-lashing to suspension and even, in extreme cases, to termination, Abcarian said.
Under the Fair Labor Standards Act, employers are required to pay overtime to non-exempt employees who put in more than 40 hours a week. But the growing popularity of flexible work schedules, including employees working from home, can add to the challenge of proper accounting of employee eligibility for overtime. Employers who fail to keep track of employee hours risk potentially expensive claims and penalties.
How important are the sophistication and timeliness of employee hour recordkeeping systems? “The wage and hour laws and regulations generally don’t prescribe when” hours are logged, Abcarian said. Nor must records be kept in a fancy electronic system. “Accuracy, is everything.” But, he added, assuring accuracy does argue against allowing an “inordinate” amount of time to elapse between when the hours are worked, and when the record is logged.