By Jeffrey Landes and Ann Mahoney

Law360 (August 25, 2020, 2:27 PM EDT )

Jeffrey Landes

Ann Mahoney

This article focuses on several key timekeeping issues for employers and recommends policies and practices that allow employers to successfully navigate them under federal law. However, state law may also apply and could impose stricter standards.

Specifically, this article covers the following key timekeeping issues:

• Off-the-clock work;
• Rounding work time;
• Overtime work;
• Meal and rest periods;
• Preshift and post-shift activities for nonexempt employees;
• Training time for nonexempt employees; and
• Additional considerations in light of COVID-19.

Under the Fair Labor Standards Act, nonexempt employees must be paid for all time worked. Employers rarely run afoul of these requirements when tracking time and paying employees for work performed during normal work hours or assigned shifts.

However, employers must also track and pay for employees' time beyond normal hours or shifts. Employers should also keep in mind that what was considered normal may no longer be normal in light of the COVID-19 pandemic as many workers have shifted to working remotely.

Because what is and is not compensable time is not always clear and employees sometimes do not report all the time that they work, employers frequently fail to satisfy the full range of their FLSA obligations.

For example, a nonexempt employee may answer telephone calls or respond to emails during an unpaid meal break. Although the FLSA requires employers to pay for such work, employees may not report it and/or the employer may not include it when calculating wages.

In other cases, an employer may use a timekeeping method that does not properly track or report all of the employee's compensable time. Such practices, whether intentional or not, expose employers to substantial liability for failing to properly track and pay employees for all time worked. This is particularly so given the timekeeping issues raised by COVID-19 for those working remotely and those returning to work in what will be a very different workplace.[1]

Off-The-Clock Work

Work that the employer does not request, but permits nonexempt employees to do outside of normal hours or shifts, on or off the worksite, is typically considered off-the-clock work for which the employer must pay the employee.

For example, employees who begin work before clocking in, continue working after clocking out, work at home, check email by remote access, call in for assignments before they leave for work, and work or answer phone calls from home or during unpaid meal periods typically perform off-the-clock work. With the rise in telecommuting due to COVID-19, the chances of off-the-clock work have greatly increased.

Because the U.S. Department of Labor generally considers off-the-clock work to be compensable work time under the FLSA, employers who do not track and compensate employees for such work and/or do not take steps to control or prevent it face stiff consequences. As noted above, states may also have relevant authority regarding off-the-clock work.

To successfully navigate off-the-clock issues, you should recommend that employers take the following steps.

Adopt clear work time policies.

Such policies should at least:

• Explain what constitutes work time — e.g., working during meal and rest periods, time spent reading and responding to emails via a smartphone — and what does not — e.g., leave time, even if it counts as work time for another purpose.
  
  
• Prohibit off-the-clock work that is not recorded as time worked and include disciplinary consequences for violating the policies. Note that disciplinary consequences should not include the employer's refusal to pay for off-the-clock work because it was unauthorized. Such refusal would violate the FLSA.
  
  
• Prohibit managers and supervisors from requesting, requiring or permitting off-the-clock work.
  
  
• Require employees to track and report all time worked, including time worked off the worksite, outside normal work hours, or via alternative means such as a smartphone or laptop at home.
  
  
• Indicate applicable meal and rest periods that comply with applicable state laws and require employees to document such periods.
  
  
• Include any modifications needed for timekeeping procedures for those working remotely.
  
  
• Allow employees to ask questions and report errors and perceived violations without fear of retaliation.

Obtain a separate signed acknowledgement of receipt.

Having employees sign a separate acknowledgement that they received, read and will abide by the work time policies can be useful when taking disciplinary action against an employee, navigating a wage and hour investigation, or defending against claims. If you draft or revise the employer's work time policies, a separate signed acknowledgement from all employees is a must.

Train employees, supervisors and managers.

Employees, supervisors and managers should understand the policy, including all work that is considered compensable work time, knowing how to track and record work time, and knowing how they may raise questions or report errors and perceived violations. Supervisors and managers should never ask or demand that employees work off the clock (e.g., to avoid overtime expenses) and employees should never do so. Supervisors and managers should also be reminded not to reach out to nonexempt workers outside of their regularly scheduled hours.

 Adopt other safeguards.

Some employers use time clocks that can be set for employee shifts in order to control off-the-clock work. Some clocks actually prevent employees from performing certain duties after clocking out. For example, a salesperson would not be able to ring up a sale after he or she has clocked out of the system.

Employers should consider using software or adopting some other system that allows employees to easily submit time worked remotely either through a laptop or smartphone. For employees who are working remotely, employers may want to encourage them to stick to their regularly scheduled hours to the extent possible. Although such tools are useful for controlling off-the-clock work, the employer must continue to track all work time and compensate employees accordingly.

Rounding Work Time

Normally, an employer must track and pay for all time worked by employees. However, the FLSA permits employers to round work time to the nearest five minutes or tenth or quarter hour as long as the practice will not result, over a period of time, in failure to compensate employees properly for all the time they have actually worked.[2] Thus, when working with quarter-hour increments, one to seven minutes may be rounded down, but eight to 14 minutes must be rounded up and counted as a quarter hour of work time.

Rounding can result in employees losing compensation for time worked. In Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership in 2016, the U.S. Court of Appeals for the Ninth Circuit held that as long as rounding is done neutrally — "without an eye towards whether the employer or the employee is benefitting from the rounding" — it does not violate the FLSA.[3]

Employers that consistently round up or engage in other rounding practices that work to their advantage — for example, manipulating time to fall within the employee's scheduled hours when the work was actually performed outside of those hours — violate the FLSA.

Although rounding is permitted under the FLSA, it does create added risk. Therefore, consider the following when evaluating an employer's rounding practices:

• Preliminarily determine whether the employer is able to track work time without rounding. If so, recommend that the employer implement the practice to avoid the risks associated with rounding.
  
  
• Recommend that the employer round to the shortest possible increment (e.g., five minutes) to reduce the amount of potential damages, particularly in collective actions.
  
  
• Recommend that the employer round at the beginning and end of the employee's scheduled hours or shift, and not at the start and end of unpaid meal breaks. Rounding during meal periods may implicate additional wage payment obligations and suggest that the employer violated state meal and rest period requirements.
  
  
• Be sure the employer has a written policy that is clear and FLSA-compliant, and that it adheres to such policy. The policy should indicate at least the following:
  
  
  • The employer will round both up and down to be sure employees are properly paid for time worked;
    
    
  • The timekeeping increments the employer will use;
    
    
  • When rounding will occur (e.g., at the start and end of scheduled hours or shifts); and
    
    
  • That employees may raise questions or report perceived violations without fear of retaliation.

Overtime Work

Improper timekeeping creates significant overtime risks for employers. Since many factors contribute to improper timekeeping, you should identify the cause. For example, off-the-clock work results in a shortage of work time for the week and may interfere with accurate overtime calculations. Time sheet errors, shaving or rounding practices may also contribute to work time miscalculations.

Proper timekeeping policies and adequate training can help employers minimize these risks. Such policies and training should generally include the following:

• How to raise questions and report errors or a policy violation;
  
  
• How to handle/respond to employee questions/complaints;
  
  
• What constitutes work time;
  
  
• How to record and report work time accurately, whether performed on or off the worksite, during or outside normal hours;
  
  
• How to correct errors in timekeeping;
  
  
• Prohibitions against working unauthorized overtime, if desired, recognizing that any overtime worked will be compensated; and
  
  
• Consequences for policy violations.

Meal and Rest Periods

Unlike most states — and except for break time for nonexempt nursing mothers — federal law does not require employers to provide meal or rest periods to employees. Federal law does, however, guide how employers must account for such periods.

For example, short breaks under 20 minutes count as work time and therefore must be paid and counted toward overtime. On the other hand, bona fide meal periods that are 30 minutes or more do not count as work time and need not be paid unless employees perform work during the meal period. When employees perform any work during an unpaid meal break — whether or not the employer requested or authorized the work — the break converts to work time and must be paid and counted toward overtime.

With respect to lactation/nursing breaks under federal law, the frequency and duration of such breaks may vary and need not be paid unless the employee continues to perform work or the employee uses an employer-compensated break to express milk.[4] State law may have different break requirements for nursing mothers.[5]

Meal and rest periods present various challenges. First, state laws vary widely on meal and rest period requirements.[6] Thus, for employers operating in multiple states it can become difficult to ensure compliance.

Additionally, employers must properly track and pay for work time during meal periods and monitor and manage employee abuses. Monitoring meal and rest periods is even more difficult for employees who are telecommuting, whether it be due to COVID-19, the need to allow someone to work from home as a reasonable accommodation, or some other reason. Proper policies and training will help the employer satisfy both its legal obligations and business needs.

Employer policies often focus on providing the requisite number of meal and break periods to comply with state law, but do not always include necessary timekeeping and related components to address the balance of their legal obligations and risks or adequately manage the workplace. Therefore, whether you are drafting or reviewing the employer's policy, be sure it:

• Indicates which employees are entitled to meal and rest periods (typically, nonexempt employees);
  
  
• Specifies the number and duration of meal and rest periods and/or clearly explains how they are determined;[7]
  
  
• Provides that unauthorized extensions of authorized work breaks are not permitted and that such breaks are not counted as work time;
  
  
• States that employees are not permitted to work during meal or rest periods;
  
  
• Directs employees to contemporaneously clock out and in for meal and rest periods;[8]
  
  
• Indicates that violations of the policy may result in disciplinary action; and
  
  
• Explains how employees may raise questions or report errors and perceived violations without fear of retaliation.

To ensure that the employer's practices align with its policy, recommend that the employer provide both formal training and informal reminders to employees, supervisors and managers. All should understand their various obligations under the policy, how they can meet those obligations, and the consequences for failing to do so.

Employees at all levels can become lax about adhering to the employer's policies in this area, and supervisors and managers may turn a blind eye to avoid overtime expenses or get work done on time. Thus, limiting training to one formal session will not likely achieve the employer's goal.

Brief discussions, periodic pop-ups and emails, and so forth help remind employees about their compliance obligations and keep them up to date on policy changes. Particularly for employers who suddenly have a workforce that is largely telecommuting due to COVID-19, employers should provide training to both managers and employees on the appropriate steps to ensure proper timekeeping while telecommuting.

Employers may also want to review their timekeeping policies to see if any adjustments should be made to reflect a large telecommuting population.

Preshift and Post-Shift Activities for Nonexempt Employees

Many employees are required to perform certain tasks at the beginning or end of their day, such as putting on or taking off uniforms or protective equipment and undergoing security screenings. Whether time spent on these activities must be compensated depends not on whether these activities are required by the employer, but instead on whether these activities are integral and indispensable to performing the principal activities of the job.

Thus, this requires a case-by-case analysis of the principal activities of the job and the circumstances. State law can also vary from the FLSA in terms of what preshift and post-shift activities must be paid. Thus, employers should carefully analyze whether such activities are considered as compensable time worked under both the FLSA and local laws.

In light of COVID-19, employees may be facing a host of new tasks they must complete before or after their work shift, such as temperature screening, completing a health assessment, donning and or doffing personal protective equipment, or cleaning their computer, telephone or other equipment at the beginning and/or end of the day. Regardless of whether such time will be considered compensable under the FLSA and or state law, employers may want to take a cautious approach and develop a system for capturing time spent on such activities as time worked.

Training Time for Nonexempt Employees

Under federal law, the time nonexempt employees spend at lectures, seminars, meetings, training programs and similar activities is generally considered compensable work time, unless the following four factors are met:

• Attendance is outside of the employee's regular working hours.
• Attendance is voluntary.
• The training does not directly relate to the employee's job.
• The employee does not perform any productive work during the training.

You should evaluate the employer's policies and practices to ensure they comply with these requirements. For example, employers should require nonexempt employees to track and report training time, require supervisors and managers to properly account for and report it, and, if it qualifies as work time, pay employees for it, and count it toward overtime.

While many employers are well aware of the need for training that meets the four factors provided above, employers should keep in mind that the same analysis will apply for any training arising as a result of COVID-19 such as training on safety protocols as employees begin to return to work.

Additional Considerations in Light of COVID-19

Employers should be aware of several other issues that may arise under the FLSA due to changes caused by COVID-19. As employers are trying to understand the demand for their goods or services in a changing economic atmosphere, there could be an uptick in both on-call time, where an employee is required to be available to begin work upon notice from the employer, and waiting time, where the employee is waiting to begin work.

Whether such time constitutes hours worked under the FLSA and must subsequently be paid depends on the circumstances and largely focuses on the restrictions placed on workers who are on-call or waiting to begin work. Certain jurisdictions may also require pay for reporting or call-in time, where an employee is required to report to work and is then sent home, for example, due to having a temperature or showing other symptoms of COVID-19, or additional compensation pursuant to predictive scheduling laws. Employers who may be facing these situations for the first time should carefully assess whether they need to pay employees for such time.

Employers who are restructuring their employees' work schedules and responsibilities should keep in mind that such changes may have implications under the FLSA. Employers that are implementing staggered shifts, staggered meal and break times, or revised work schedules will face additional difficulty in ensuring proper timekeeping.

Further, an employee's exemption status may change from exempt to nonexempt if an employee's job no longer involves exempt activities or the supervision of others, or if their salary falls below the required threshold due to a salary reduction. Issues may arise for those who properly classified as exempt as well.

For example, when making decisions about exempt employees' schedules, employers should be mindful that exempt employees typically must be paid for a full week if they perform any work during the given week, with narrow exceptions. Additionally, for exempt employees who are furloughed, employers should limit contact because anything beyond de minimis contact could result in having to pay the employee for the full week.

A final potential FLSA pitfall for employers is reimbursement of business expenses related to telecommuting, such as cell phones and internet access. Under the FLSA, employees cannot be forced to incur business expenses that bring their pay below minimum wage. Additionally, certain states require reimbursement of necessary business expenses.

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Jeffrey M. Landes is a member and Ann Knuckles Mahoney is an associate at Epstein Becker Green.

This article is excerpted from Lexis Practice Advisor®, a comprehensive practical guidance resource that includes practice notes, checklists, and model annotated forms drafted by experienced attorneys to help lawyers effectively and efficiently complete their daily tasks. For more information on Lexis Practice Advisor or to sign up for a free trial, please click here. Lexis is a registered trademark of RELX Group, used under license.

Law360 is owned by LexisNexis Legal & Professional, a RELX Group company.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] For detailed information on drafting timekeeping and related policies, see: Compensable Time (FLSA), Rest Break and Meal Period Policies (Including Break Time for Nursing Mothers): Key Drafting Tips, Off-the-Clock Work and Timekeeping Policies: Key Drafting Tips. For information on relevant state laws, see the Compensable Time column in the Wage and Hour State Practice Notes Chart. See also Meal Period and Rest Break State Law Survey.

[2] For more information on rounding, see Compensable Time (FLSA)—Off-the-Clock.

[3] See Corbin v. Time Warner Entertainment-Advance/Newhouse Partnership , 2016 U.S. App. LEXIS 7896, at *20 (9th Cir. May 2, 2016).

[4] For additional information about federal requirements regarding break time for nursing mothers, see Compensable Time (FLSA)—Lactation / Nursing Accommodation / Breastfeeding Breaks.

[5] For more information on state break requirements for nursing mothers, see the Lactation/Nursing Accommodation links in the Compensable Time column in Wage and Hour State Practice Notes Chart.

[6] See Meal Period and Rest Break State Law Survey.

[7] State law usually requires employers to provide meal and rest periods based on the number of hours employees work per day. Employers may be more generous, but not more restrictive. Be sure general provisions for meal and rest periods do not conflict with the employer's obligations concerning nursing mothers.

[8] Although short rest periods are counted as work time and paid, the employer should be able to show that the requisite meal and rest periods were provided.

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