Question: Do employers’ own computers create potential overtime liability for off-the-clock work?

Answer:

Yes and a health-care company in California just learned that the hard way.  An employee of John Muir Health sued her employer on behalf of herself and a potential class of employees for overtime violations under both the Fair Labor Standards Act (FLSA) and the California Labor Code.  While the plaintiff in that case could not specifically allege the hours worked by employees, the Judge declined to dismiss the overtime claims because the plaintiff alleged that the employer’s computer systems would establish that the employees had worked off-the-clock.

Off-the-clock work is work that is performed for the benefit of an employer that is not counted towards an employee’s weekly hours worked and is not compensated.  This may take many forms, such as employees who put in extra work by coming in early, staying late, working through lunch or regularly checking email after work hours.  Employees may think they are being helpful, but if this time isn’t captured and compensated, it can leave employers vulnerable to overtime violations.

The named plaintiff in the John Muir Health case claimed that she and other employees would clock out, but then continue to conduct work, such as entering patient notes and processing insurance claims.  The employer’s EPIC and MIDAS computer systems track when employees are using those systems.  The employer’s KRONOS system tracks when employees clock in and out of work.  The plaintiff claimed that her overtime work, allegedly totaling about $30,000, could be determined by comparing her time entries in each of her employer’s three computer systems.

Some employer takeaways to avoid off-the-clock exposure:

• Ensure that hourly employees are not performing off-the-clock work and that your own computer systems do not establish otherwise;
• Do not allow employees to clock out and then continue working or to spend time monitoring or responding to emails in the evenings or on weekends;
• Make sure your management team knows not to reach out to hourly employees after work hours, which may create an expectation that the hourly employees respond;
• Consider limiting hourly workers’ remote access to computer systems to prevent off-the clock work from being performed;
• Implement a policy that prohibits hourly employees from engaging in off-the-clock work and emphasizes that all working time must be recorded; and
• Pay for after-hours work performed and take disciplinary action if the off-the-clock work is unauthorized.

About the Author:  Laura Liss (lliss@pfs-law.com) is Chair of Patzik Frank and Samotny’s Employment Law Practice Group. She provides both legal and practical business advice on all phases of employment-related decisions. She regularly serves as a sounding board for business owners, executives and human resources professionals and assists them in successfully and efficiently navigating the various employment laws that impact their businesses.

 

Question: Can private employers provide comp time to hourly employees rather than overtime?

Answer:

No, private employers cannot offer hourly (or non-exempt) employees compensatory (comp) time in lieu of overtime. Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid time and one-half their regular rate of pay for all hours worked in excess of 40 hours in a work week.

One common misconception is that it is allowable to provide comp time in lieu of overtime if the employee agrees. However, even if the employee agrees, or even prefers it, private employers cannot allow employees to accrue comp time in lieu of paying them overtime. Likewise, this is not permissible even if you allow the use of comp time in the same pay period. For example, you can’t allow an employee to work 34 hours one week, to offset the employee having worked 46 hours the prior week of a bi-weekly pay period. Even though the employee nets 80 hours in the pay period, the employee still worked 6 hours of overtime the first week of the pay period and is entitled to be paid time and one-half for those 6 hours of overtime.

Stay tuned, however. Congress currently is considering the Working Families Flexibility Act of 2017, which could amend the FLSA to allow employers to bank paid time off in lieu of paying overtime. The bill has conditions and limits and other nuances to be aware of, but we can worry about those details if and when the bill passes. In the meantime, stick with paying overtime.

Question: When is it acceptable to take deductions from an exempt employee’s pay?

Answer:

An employee is considered to be paid on a “salary basis” under the Fair Labor Standards Act (FLSA), if the employee receives a preset amount of pay each work week and that amount is not subject to reductions based on changes in the quality or quantity of the work performed. Except in limited circumstances, an exempt employee must receive his full salary for any work week in which he performs any work, regardless of the number of hours or days worked. On the other hand, an exempt employee does not need to be paid for any workweek in which he performs no work. An employee is not paid on a salary basis if deductions from the employee’s preset compensation are made for absences caused by the employer or the operating needs of the business. If an exempt employee is ready, willing and able to work, deductions may not be made from his preset salary when work is unavailable.

Here are the limited circumstances when deductions from an exempt employee’s pay may be made, despite the salary basis requirement:

(1) When an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability;

(2) For absences of one or more full days caused by sickness or disability (including work-related accidents) if the deduction is made consistent with a bona fide plan, policy or practice of providing payment for loss of salary caused by such sickness or disability. In addition: (a) you need not pay any portion of the employee’s salary for full-day absences for which the employee receives compensation under the plan, policy or practice, and (b) deductions for full-day absences may be made before the employee qualifies for benefits under the plan, policy or practice, and after the employee exhausts the leave allowable under such plan, policy or practice;

(3) For penalties imposed in good faith for infractions of safety rules of major significance, which include those relating to the prevention of serious danger in the workplace, such as rules prohibiting smoking in explosive plants, oil refineries and coal mines; or

(4) For unpaid disciplinary suspensions of one or more full days imposed in good faith for violations of workplace conduct rules. Such full-day suspensions must be imposed pursuant to a written policy that applies to all employees. (A good reason to have an employee handbook or other written policy with standards of conduct and disciplinary rules.)

In addition to these exceptions, employers are not required to pay an exempt employee his full salary: (1) in the employee’s first or last week of employment; or (2) in weeks when an exempt employee takes unpaid leave under the Family and Medical Leave Act (FMLA).

Finally, while employers cannot make deductions from an exempt employee’s pay for absences caused by jury duty, attendance as a witness or temporary military leave, employers may offset any amounts received by an employee as jury fees, witness fees or military pay for a particular week against the salary owed that week without loss of the exemption.

So, now you know when you can make deductions from an exempt employee’s pay without losing the exemption, but how do you calculate the amount of such deductions?  You may use the hourly or daily equivalent of the employee’s full weekly salary or any other amount that is proportional to the time actually missed by the employee. In the case of a deduction as a penalty for violations of major safety rules, you may make the deduction in any amount.  Who says the FLSA isn’t fun!?