Stretching the Limits on Flexible Work Arrangements

Are we seeing the end of 40-hour work weeks by employees? While some workers may be accustomed to toiling around the clock in an effort to climb the corporate ladder, a recent study shows that more and more employers are encouraging improvements in work-life balance by offering flextime, alternative worksites, and optional overtime in hopes of retaining employees who may be lured away by less intensive hour requirements or more lucrative job opportunities.

By the Numbers
According to the 2012 National Study of Employers conducted by the Society for Human Resource Management and the nonprofit Families and Work Institute, 77% of companies who were surveyed said that they now permit or encourage flextime, up from 66% from 2005. Nearly two-thirds reported that they allow employees to work occasionally from home, which is a significant increase from 34% prior to the recession seven years ago. Employees are also finding it more acceptable to turn down overtime hours. Now, 44% of employers surveyed said they give their

workers a say in whether or when they will put in extra hours, which is an increase of 28% since 2005. Many employers are adopting creative work schedules to encourage employees to stay put now that the job market is opening up. But in doing so, they may not be paying sufficient attention to the compliance implications of wage payment laws that may affect these arrangements. There are potential pitfalls under both federal wage and hour laws and the requirements and limitations of local and state laws that demand close attention, which means it may be time to make sure your human resources department is managing employee working hours the right way.

Frequently Asked Questions on Overtime Compliance

Q: How A:

do I stop overtime claims by non-exempt employees who claim they worked hours off the clock?

Dont Bend the Rules

Most wage-payment laws were not designed to be flexible or adaptable, or to facilitate the practical concerns of modern-day employers. Nevertheless, these requirements remain in force, and you should ensure that alternative-scheduling plans comply with what at times may seem antiquated, or even nonsensical, legal requirements. You can reduce the likelihood of unintentional violations by understanding a few key concepts and being proactive.

Recordkeeping
If employees are allowed to work flexible or unusual hours, it may be necessary to implement a more precise recordkeeping system to track the time worked. If not, small timekeeping errors may gradually accumulate, leading to hundreds of thousands of dollars in liability, penalties, and attorneys fees if you are forced to defend wage-payment claims on a class basis. Supervisors must properly train and monitor employees in connection with accurate timekeeping practices both for those who work inside the office or plant, and those who work at home or telecommute. Discipline those who violate these important rules.

The law really favors employees in these situations unless you keep detailed and accurate time records. Accordingly, your first task is to make sure your time records are well kept. Next, make your employees sign off on their time sheet each week. Have your supervisors print out weekly (or bi-weekly) time sheets for each employee and add a statement at the bottom which says I agree that this timesheet accurately represents all time I have worked for the dates included on this time sheet. I also agree that, if I do not believe this time sheet is accurate, I will immediately report this to my supervisor in writing. At the end of each week, your supervisors should be responsible for ensuring that every time sheet has been signed or reviewed if there is any issue. This practice will provide strong evidence to use against an unpaid overtime claim.

Q: Most of my maintenance employees

are on call for at least one night a week. I have never paid them unless they actually come in to fix something. Is this right?

A:

Overtime Work and Pay

Just because overtime work may be optional for some flextime employees, its still crucial to account for all overtime hours worked and properly compute overtime pay for employees who are not exempt from the overtime pay provisions of federal and state laws.

Classifications
Most flextime litigation has to do with misclassification of workers who are thought to be exempt from the overtime pay provisions of federal or state law.

It depends. In general, on-call time only is compensable if you keep the employee from doing what they want to do while they are on-call. A no-alcohol restriction generally is fine, and you can require a reasonable response time to a call, i.e. an hour. Things get a little trickier if you place additional limitations on your employee, such as requiring that they stay within a 10 mile radius of your place of business, or requiring an immediate response to a call and arrival at your place of business within 15 minutes. In sum, the less restrictions you place on their time, the better argument you have that the on-call time is not compensable. (Continue on next page)

Do I have to pay my employees whenever they respond to an e-mail or phone call after hours? What if the extra time means they now are owed overtime, even if the hours were not authorized?

Q:

A:

Generally, you have to pay your employees for time spent responding to e-mails, etc. after hours, even if it is on a smart phone. The best defense against an employee working after hours is a good policy prohibiting working off the clock without permission. This policy also should require employees to immediately report any time worked off the clock. Then, when an employee works off the clock responding to e-mails on their phone (or any other time off the clock), you pay them for the time, and then you discipline them for violating the policy. Your response should be the same, whether the extra time means you owe overtime or not. Remember, working unauthorized overtime is no different than any other work rule violation. Although you have to pay the employee for the time worked, you still should discipline the employee for violating a work rule. If feasible for your company, I recommend that my clients limit the use of employer provided smart phones to exempt employees, and I also recommend that my clients have a rule that nonexempt employees cannot connect their phones to the server to receive work e-mails. If this will not work for your company, it is always a good idea to review which employees really need smart phones and PDAs, and to limit the number of non-exempt employees walking around with phones that can send and receive work e-mail.
Martin B. Heller is an associate in the Labor Law and Employment Litigation Section of Freeman Mathis & Gary. Mr. Heller represents public and private sector employers on a national, regional, and local basis in all aspects of employment litigation, including wage and hour claims, employment discrimination claims, family and medical leave claims and employment contracts.

As a general proposition, all employees are presumed to be nonexempt from the overtime pay provisions of the FLSA, unless you can show that a specific exemption applies. In other words, employees are entitled to overtime pay for all overtime hours. Research shows that a significant number of employees for example those who perform safety duties are treated as exempt when they usually do not fall within any specific exemption category under the FLSA. Although it may be possible to defend such exemption strategies, you must be sure all employees are properly classified in order to avoid this common wage payment problem.

First, See if It Fits

When implementing a flexible work schedule, its a good idea to pilot the program. Analyze the pros and cons after a few laps around the track, obtain employee feedback, and make any necessary adjustments before setting the ongoing plan in place. At the outset of the pilot program, remind employees that if the plan proves unsuccessful, the company will return to prior work scheduling arrangements. With the number of wage-payment claims soaring in recent years, these matters can be time consuming and expensive to defend, even if youve done little that is found to be out of compliance. Generally, these cases boil down to little more than the mechanics of how your employees should have been paid. To avoid costly litigation, take time to understand your obligations under the FLSA and other applicable wage payment laws, and make compliance a priority. Good-faith efforts go a long way toward improving the odds of a smooth trip when traveling down the path of wage and hour compliance. Michael Abcarian is managing partner of the Dallas office. His experience includes representing Fortune 500 corporations, units of local government, and local business interests in labor and employment matters. He handles cases in both federal and state courts, as well as complex litigation and class actions.