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Distance Learning – Know the Rules Regarding Non-exempt Employees Who Telecommute

Telecommuting is one of the fastest-growing employment trends in the U.S., up 103{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} since 2005. Today, more than 3.7 million employees telecommute at least half the time. Undoubtedly, that number will continue to grow, because 85{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of Millenials, who make up the largest generation in the workforce, would actually like to telecommute full-time.
Although research shows that telecommuting improves morale, increases productivity, and improves employee quality of life, there are many legal issues for employers that may complicate this popular work arrangement.

The Fair Labor Standards Act
The federal Fair Labor Standards Act (FLSA) and parallel Massachusetts law require employers to pay their employees properly. These statutes categorize employees in two ways: exempt and non-exempt. For non-exempt employees, the vast majority of the workforce, the employers must keep detailed records of hours worked and wages paid, pay the overtime rate of time and half for all hours worked over 40 per week, and pay employees minimum wage.
Exempt employees are just that: employees who are exempt from these record-keeping and overtime requirements. Thus, telecommuting for exempt employees does not implicate wage/hour law. However, employers should take great care before classifying employees as exempt. The FLSA and Massachusetts law lay out a few narrow exceptions with specific job and salary requirements. To ensure you are properly classifying your exempt workers, consult with an employment attorney before classifying employees as exempt.

Record-keeping Requirements
For non-exempt telecommuting employees, the employer must keep accurate time records and pay the employee for all work performed. How does an employer keep records for an employee it never sees?
Employers may utilize an electronic time-keeping program that requires employees to punch in and out, or rely on paper time cards. Regardless of form, the employer should provide time sheets for employees to use when recording their work hours. Employees should also ‘sign off’ on their time sheets, either electronically or in paper form.
According to the 11th Circuit Court of Appeals, the employer is responsible for providing the time sheets, but the employee is responsible for accurately keeping their time records. Thus, the telecommuting policy should emphasize that the employee is responsible for accurately recording their work hours.
Employers should also provide telecommuting employees with information to help them independently determine what working time is compensable. For non-exempt employees, compensable time is any time spent engaged in ‘principal activity.’ Commuting time may also be compensable. If employees complete principal activity at their home or office, then travel to the other workplace and complete principal activity there, then their commuting time is compensable. Consult with employment counsel to help define principal activity and to untangle the many complicated issues surrounding compensable time under wage/hour law.

Proper and Timely Payment of Wages
Regardless of the telecommuting employee’s status as exempt or non-exempt, the employer is responsible for complying with all state and federal wage laws. Employers must know where telecommuting employees will be working because state law governs many facets of the employment relationship, including meal and rest breaks and how often employees must be paid.
In Massachusetts, employees are entitled to a 30-minute meal break when working six or more consecutive hours, and wages must be paid on either a weekly or biweekly basis.
Location is also particularly important to comply with minimum-wage laws, because some states and municipalities, such as San Francisco, have higher minimum-wage rates than federal law. In Massachusetts, the minimum wage is currently set at $10 per hour, with another increase scheduled for Jan. 1, 2017. Consult with your employment counsel to ensure compliance with state and local laws.

Overtime Managed
Keeping accurate time records not only aids in tracking employee eligibility for federally mandated benefits under the Family Medical Leave Act and the Affordable Care Act, but also in the proper calculation of overtime compensation. How can an employer control overtime for employees who telecommute? The telecommuting policy should clearly prohibit overtime, unless authorized in advance.
The policy should be consistently enforced, with proper remedial action taken after each violation. However, regardless of the employer’s overtime policy, a non-exempt employee must be paid overtime compensation, at the time-and-a-half rate, for all hours worked over 40 per week.
Even so, some overtime does not have to be paid — if the activity is de minimis. De minimis activity is an insubstantial or insignificant period of time, beyond the normal work hours, that cannot practically be precisely recorded for payroll purposes. Business realities will determine if an activity is de minimis, so consult with your employment counsel on any question about whether overtime pay is due or not.

The Best Policy
The best telecommuting policy is one that is well-thought-out and extremely clear. The policy should clearly define what it means to work, what is ‘principal activity,’ which activities are compensable, and how to request authorization for overtime. The policy should also be clear as to when employees are not expected to work, what breaks should be taken, and that the employee is responsible for accurately recording their work hours.
The best policy will not only give employees important information, but get important information in return. Because state and local laws differ, employers should obtain information about the legal obligations in the specific state where their employee will be based.
Employers may wish to test their telecommuting policy by running a pilot program. A test run can help identify potential problems and allow for proactive solutions to be incorporated into the final policy. Because of the legal complexity of this area, employers should carefully consult with employment counsel when developing and implementing a telecommuting policy and program.
Finally, as with any policy, the telecommuting policy must be clear about which employees are eligible to telecommute. The policy should be consistently followed, as inconsistent awarding of telecommuting privileges could expose the employer to liability for discrimination.