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DOL Clarifies Obligation to Track Compensable Hours

August 27, 2020

By J. Kent Pearson, Jr.

In response to the COVID-19 pandemic, employees are working from home in unprecedented numbers. Remote work creates a number of challenges for employers, both practical and legal. On August 24, 2020, the U.S. Department of Labor issued guidance on one of the most critical issues created by employees working remotely: an employer’s obligation to accurately record and pay for all hours worked by its non-exempt employees.

In Field Assistance Bulletin No. 2020-5, the DOL cautions employers that simply paying for all hours reported by an employee on the employer’s timekeeping system may not be sufficient to maintain compliance with the federal Fair Labor Standards Act (FLSA). To the contrary, if an employer knows or has reason to know that an employee has performed work not recorded in the employee’s time records, the employer must pay for the unrecorded time or risk liability under the FLSA. For example, if a manager or supervisor receives work-related emails on an employee’s regular day off, and the employee’s time records do not reflect any work on that day, the e-mails may put the employer on notice that the employee performed additional work for which the employee must be paid. In such a situation, the DOL considers the employer to have “constructive knowledge” of the additional work.

In its bulletin, the DOL clarifies that an employer must exercise “reasonable diligence” to determine whether an employee has performed unscheduled work. According to the DOL, one way to exercise reasonable diligence is “by establishing a reasonable process for an employee to report uncompensated work time.” If an employer establishes such a process and the employee then fails to report unscheduled hours worked, the employer is generally not required to pay for the time or investigate further to discover the unrecorded work time (for example, by searching computer records to determine when an employee logged on and off the employer’s network). Notably, employers must reasonably instruct employees on how to use the reporting process, and the reporting process will not protect an employer from liability if it discourages employees from reporting all time worked.  Finally, regardless of whether the employee uses the reporting process for unscheduled time, an employer must always pay for unrecorded work time that it actually knows about.

The DOL’s bulletin serves as an important reminder for Oregon employers, regardless of whether they are covered by the FLSA. All employers should have a written policy requiring employees to record all time worked, including work time outside their normal work schedule. In addition, employers should train their supervisors regarding the need to promptly alert management in the event an employee reports performing work “off the clock,” including time worked outside regular work schedules and during unpaid meal breaks. Finally, employers generally should pay for any unauthorized overtime or time worked outside the employee’s normal schedule, but consider disciplining the employee for violation of any employer policies requiring advance authorization for such work.

If you have any questions, or would like help reviewing or creating wage and hour policies, please let us know.             
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