DOL’s Wage and Hour Guidance on Remote Work

Employers must pay employees who work remotely or who telework for all hours worked of which employers either know or have reason to believe were performed, regardless of whether the work was approved, the United States Department of Labor’s (DOL) Wage and Hour Division said in a Field Assistance Bulletin published late this summer.

The Fair Labor Standards Act has very strict standards on employee pay. The federal law requires that employers pay their employees for all hours worked, whether required by the employer or that an employer allows an employee to perform even if not requested. This can include situations where an employee works outside his or her scheduled time without the employer’s permission, but the employer knows or has reason to know the employee is working.

“Remote work by nonexempt employees can pose a challenge with regard to ensuring employees are paid for all time worked, as the traditional workday may be blurred in a remote environment,” according to law firm Ogletree Deakins.

“Remote work by nonexempt employees can pose a challenge with regard to ensuring employees are paid for all time worked, as the traditional workday may be blurred in a remote environment.”

The Labor Department noted that when employers allow employees to work from home, an employer’s obligation to track unscheduled hours may arise.

Telework has expanded radically in response to the COVID-19 pandemic. For example, in Washington, D.C., about 95% of downtown’s 167,000 office workers were working from home this summer, according to a recent report from the DowntownDC Business Improvement District, the Washington Post has reported.

Yet, in a remote work environment, difficulties in monitoring employee work hours can occur. “While it may be easy to define what an employer actually knows, it may not always be clear when an employer has reason to believe that work is being performed, particularly when employees telework or otherwise work remotely at locations that the employer does not control or monitor,” DOL said in the guidance.

Reasonable diligence

Under the FLSA, if the employer knows or has reason to believe that work is being performed, the time must be counted as compensable hours worked. The requirement is based on both “actual knowledge” or “constructive knowledge” of work performed.

In determining whether an employer has actual or constructive knowledge of additional unscheduled hours worked by their employees, courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence, the federal agency noted.

One way an employer can exercise such diligence is by providing a reasonable reporting procedure for nonscheduled time and then compensating employees for all reported hours of work, even hours not requested by the employer, according to DOL.

But an employer can’t stand in the way of employees reporting their time. An employer’s time reporting process will not constitute reasonable diligence where the employer either prevents or discourages an employee from accurately reporting the time he or she has worked, and an employee may not waive his or her rights to compensation under the FLSA.

“However, if an employee fails to report unscheduled hours worked through such a procedure, the employer is generally not required to investigate further to uncover unreported hours,” the Labor Department said.

What employers are not required to do

If an employee fails to report unscheduled hours worked through such a procedure, the employer is not required to undergo impractical efforts to investigate further to uncover unreported hours of work and provide compensation for those hours.

In addition, employers are not required to pay for work they did not know about and had no reason to know about, DOL said. If an employee fails to report unscheduled hours worked through such a procedure, the employer is not required to undergo impractical efforts to investigate further to uncover unreported hours of work and provide compensation for those hours.

Though an employer may have access to non-payroll records of employees’ activities — such as records showing employees accessing their work-issued electronic devices outside of reported hours — reasonable diligence generally does not require the employer to undertake impractical efforts. These efforts could include sorting through this information to determine whether its employees worked hours beyond what they reported, DOL said.

A policy against unauthorized work

The employer bears the burden of preventing work that is not desired, DOL said, explaining that merely formulating a policy against unauthorized work is not enough. “Management has the power to enforce the rule and must make every effort to do so,” DOL said, quoting a 1997 federal court case.

DOL also pointed out that the phrase, “must make every effort to do so,” does not mean that the “duty of management to exercise its control” to prevent unwanted work is unlimited. The inquiry is whether the employer’s efforts are reasonable in light of the circumstances surrounding the employer’s business, including existing overtime policies and requirements.

What does it mean?

“The Bulletin reaffirms the importance of clear timekeeping policies, procedures, and practices, and indicates that reviewing proper compensation for teleworking employees is on the DOL’s radar,” according to law firm Greenberg Taurig.

The agency’s Field Bulletin also confirms to employers that their obligation to make efforts to prevent unwanted work is not unlimited, attorneys with Ogletree Deakins wrote in an analysis: “The DOL recognizes that in a remote work environment, an employer may have difficulty exercising control when the employer does not have reason to believe work is being performed — and therefore the employer’s obligation is ‘not boundless.'”