Employers should consider implementing policies and procedures thatprotect both their employees from being compelled to work overtimeand themselves from being on the receiving end of overtime claims.(Photo: Shutterstock)

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When state and local governments in Pennsylvania, New Jersey,and Delaware began issuing stay-at-home orders in response to theCOVID-19 pandemic, many workers fortunate enough to still beemployed suddenly found themselves working from home.

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Such an abrupt and dramatic shift has triggered uncertainty foremployers and their employees, and is presenting unique challengesfor both groups.

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Related: Remote working: Preparing for the long-termworkplace shift

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One of those challenges is not running afoul of wage and hourlaws due to the increased chances that remote employees will beworking overtime. After all, those employees will likely haveaccess to technology, or be taking on new responsibilities, theydidn't have when they primarily worked in their offices.

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As a result, employers should consider implementing policies andprocedures that protect both their employees from being compelledto work overtime and themselves from being on the receiving end ofovertime claims.

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Overtime basics

The federal FairLabor Standards Act (FLSA) governs minimum wage, overtime payand recordkeeping for part-time and full-time workers in theprivate and public sectors. The FLSA divides employees into twocategories.

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Nonexempt employees are generally paid hourly and are entitledto overtime pay at one and one-half times their regular rate of paybeyond a 40-hour workweek.

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Employees are exempt from minimum wage and overtime payrequirements if they work in bona fide executive, administrative,professional and outside sales positions.

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(There are many factors to determine those classifications,including the duties performed. But that is a topic for a differentday.)

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Exempt employees are generally salaried and not entitled toovertime pay. However, they must be paid the same amount per payperiod, regardless of how many hours they work. That is, they mustbe paid the same even if they work more or less than 40 hours.

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One of the factors in determining if an employee is exempt ornonexempt is the salary threshold.

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Prior to 2020, the executive, administrative and professionalexemptions—so-called "white-collar exemptions"—only applied toworkers earning an annual salary of at least $23,660 ($455 perweek). But 2020 ushered in an increase in that minimum salary.

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A threshold matter: 2020's new federal overtime rules

Effective Jan. 1, final regulations issued by the U.S.Department of Labor (DOL) increased the annual salary threshold to$35,568 ($684 per week). Only employees making at least this amountcan be classified as exempt from overtime. Employees making lessthan that amount are entitled to overtime pay.

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(Note that independent contractors are not "employees" and donot have the same protections.)

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The DOL estimatedthat 1.3 million additional employees would be entitled toovertime pay as a result of the increased salary threshold.

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In addition, the DOL clarifiedwhat sorts of perks employers may exclude when determining theregular rate used in calculating a worker's salary threshold, suchas parking fees, benefit contributions, bonuses, gym memberships,tuition benefits, and discounts and reimbursements on goods orservices like cellphone plans.

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These new regulations changed the overtime calculus foremployers and employees alike.

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Suddenly, on Jan. 2, employees who weren't eligible for overtimewere now eligible even though their duties did not change. Theywere now able to earn higher wages for working the same amount ofhours they did when they were last in the office just a few daysbefore.

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The DOL's new overtime regulations required employers to take afresh look at how they were compensating particular employees. Foremployees making between $23,659 and $35,567, their employers hadto decide whether to increase their base salaries to keep themexempt, or maintain their base salaries but change their duties sothat they didn't earn the difference between the two salarythresholds in the form of overtime wages.

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So even before COVID-19 forced many people to work from home,the overtime issue was impacting employer-employeerelationships.

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The monitoring problem

Recentguidance from the DOL notes that employers may encourage orrequire employees to work from home to control the spread ofCOVID-19. However, employers are not required to have teleworkprograms in place.

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In addition, employees may request to work from home as areasonable accommodation under the Americans with Disabilities Act(ADA) if the individual's essential job functions can be performedfrom home.

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Remote work does not change the federal wage-and-hour laws; theyapply the same to employees working from home. And the overtimelaws still apply to nonexempt employees working from home.

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With large numbers of nonexempt employees working remotely,employers may have difficulty monitoring the number of hours thoseemployees are actually working. Many employers will be unable touse the same compliance measures they use in the workplace toprevent nonexempt employees from working overtime while athome.

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Without these measures, and left to their own devices, it's easyto see how nonexempt employees could be tempted to work longer thana normal eight-hour workday. Typical off-the-clock tasks such asreading and responding to emails and doing "just a few minutes ofresearch" can add up over the course of a week and lead to a claimfor overtime wages.

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Revised policies and procedures

To protect their employees from feeling compelled to workovertime, and themselves from overtime claims, employers shouldimplement or reexamine policies and procedures covering employeesworking from home.

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First, employers should create or update written employmentpolicies that require nonexempt hourly employees to submit or entertime-worked, at least on a daily basis.

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Employers may want to consider using software applicationsthrough which remote employees can easily log their hours. Thiswill allow supervisors to monitor employees' hours on a daily basisto ensure they are not logging more hours than authorized. Theseapplications may include notification systems that automaticallynotify a supervisor when an employee has reached a certain numberof hours.

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This step is particularly important because the FLSA requiresemployers to keep records on wages and hours, including the totalhours worked each workday and each workweek. Employers that fail tokeep and maintain such records are subject to enforcement actionsby the DOL's wage and hour division. Failing to keep proper recordsmay lead to employer liability for back pay of overtime wages whenemployees make such claims.

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Second, employers should require nonexempt employees to log offsystems at the end of the workday, including email, instantmessaging, and other applications. If such systems and applicationsare connected to employees' mobile phones, they should beinstructed to ignore after-hours emails and messages. In order forthis policy to be successful, however, employers must make clearthat from a corporate culture perspective, there should be noexpectation or requirement that nonexempt employees respond toemails and other communications outside their normal workinghours.

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Third, and speaking of normal working hours, these policiesshould also require, to the extent possible under thecircumstances, nonexempt employees to work regularly scheduledhours. Given the challenges brought about by the COVID-19 pandemic,such as children being at home instead of in school, a change inthese employees' scheduled hours may be necessary.

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On this note, employers should work with employees to offerflexible schedules, if possible. Employers should also have awritten policy that an employee cannot work overtime without priorauthorization. Such a policy should include disciplinary measuresfor failing to adhere to this rule.

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Act now or pay later

The COVID-19 pandemic has forced many employees to temporarilywork from home. That change may become permanent as many employeesmay decide, once their offices are reopened, that they'd ratherwork from home.

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While working from home may cut down on the time employees loseto traffic-plagued commutes, it also increases the chances thatnonexempt employees could feel compelled to work overtime and thusbe entitled to receive overtime wages—and that employers could beon the hook for failing to pay those wages.

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Employers that have not already revisited their policies andprocedures regarding nonexempt employees working from home due toCOVID-19 ought to. If they don't act now, one way or another,they'll pay for it later.

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William Rieser is an associate at thePhiladelphia law firm of Sidney L. Gold &Associates. His practice, as well as that ofthe law firm, is exclusively concentrated in the representation ofboth employees and employers in all aspects of employment-relatedligation, including overtime claims under the Federal LaborStandards Act and state law. He can be reached at [email protected]or 215-569-1999.

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Read more: 

• 6 categories of employment lawsuits to expect inthe wake of COVID-19
• Joint employment, overtime and other wage-and-hourissues to watch
• Your remote workforce: Tools and processes for asmoother transition