Telecommuters, Minimum Wage and Overtime — Oh My!

Suppose you are a manager at Anycompany in Anytown, USA. You have read the last two weeks’ posts on The Emplawyerologist (click here and here if you did not). You now know that you may have to allow telecommuting for certain employees as a reasonable accommodation under ADA, and you also know that you may be responsible for your telecommuting employees’ safety. You now have a Telecommuting Agreement that your workers sign. Your agreement addresses the reasonable accommodation issues (if applicable) and you have addressed all safety and workers’ compensation issues. You are off to a good start in protecting yourself against liability issues associated with telecommuting! If you stop there, though, you are still vulnerable in another major hot-button area: wage and hour issues. Join The Emplawyerologist after the jump to learn more…

Whether your work on your premises or from their home, (or from yet another remote location) you need to be aware of and compliant with federal and state wage and hour laws. You can compensate your telecommuting employees at a different, even lower,  rate as long as they earn at least minimum wage and you properly calculate their regular rate and overtime pay. If your telecommuting employees are correctly classified as exempt from minimum wage and overtime pay, then, it is not likely you will have a wage and hour issue. If you classify them as exempt when they are not, however, you could be in for some trouble. What are some of the common pitfalls with telecommuters? Here are some:

• When is the employee’s official “start” time? Is it a set time regardless of whether s/he is actually working? While preliminary/postliminary activities  are not usually  compensable if they occur before or after integral activities. (Click here for review.)  Is the time s/he spends booting up the computer or starting other equipment at home her start time? What if s/he boots up the computer then does some dishes and washes the floor? This is one of many reasons to have a telecommuting agreement and to specify when your employee should start up all work-related equipment and log on to his/her computer.
• How will you keep track of the actual hours your employee works? You can require your telecommuting employees to log in and out, and have IT or similar-type people monitor that. You can also have these employees complete electronic time sheets. Your IT experts may have some other suggestions as well. You may also want to consider spelling out the employee’s work hours in your telecommuting agreement and include a provision that s/he will not work any overtime without express written consent from his or her supervisor. (If s/he does do so, however, you will be legally  obligated to pay the overtime wages, but you can specify in your telecommuting agreement that  employees who do so may be subject to discipline, up to and including termination.
• What if equipment or an internet connection goes down? If the system goes down completely and you tell the employee not to work any more hours that day, time worked after that is generally not compensable.
• What if you require your employee to be on-call, but s/he is not actively working? We actually did look at this issue here and here. In a nutshell, though, if your telecommuting employee must be waiting at a computer or phone, it is most likely compensable. If your employee has leeway in his or her response time and can go anywhere while s/he is ‘on-call’, then the time is probably not compensable.
• What about travel time?  Most of us know that time spent traveling from home to work is not compensable; nor is time spent traveling from home to a first client. An employee working from home clearly is not traveling to work though. If, however, a telecommuting employee works from home in the morning and then travels to the office for the rest of the day, the time might well be compensable. This is a “gray” area. Please note that any non-exempt employee’s (whether s/he works on premises or from home) use of a cell phone or blackberry for work purposes is compensable work time.
• If you send your employee to a lecture, meeting or training, whether or not s/he works on your premises, the time spent there will be compensable.
• What if you pay your telecommuting employees a piece or project-based rate? Telecommuting does NOT obviate the need to track  hours worked. If the project takes longer than you thought it would, you must pay for all time worked. You would need to keep track of all the hours worked, divide that total by the rate you are paying to make sure that you are paying minimum wage. If the hours are more than 40 (and more than 8 in one day in California) then you are looking at owing overtime.
• What about meal and rest times?  State laws dictate here. You will need to check the laws of the state in which your telecommuting employee is working. If your employee is telecommuting from a state that requires paid meal and rest breaks, make sure you are in compliance.

Those are just some of the pitfalls. How can you protect yourself? Here are some possibilities:

1.  Have your employees sign a telecommuting agreement spelling out the actual work  hours, and what constitutes the start of work, and require manager approval before the employee can work overtime. ( I know I said that already.)
2. I said this too, but it’s important so once more: keep track of hours worked, and monitor payroll and time sheets.
3. Include provisions as to which state’s law will apply in interpreting the telecommuting agreement and in resolving any disputes. Courts won’t always defer to such a provision, but often they will.
4. Make sure your telecommuting agreements still include those provisions included in your standard employment agreements, such as at-will disclaimers (click here, here and here  for review).
5. As always, speak with your friendly, knowledgeable local employment counsel!

Join The Emplawyerologist next week when it explores telecommuting, ensuring confidentiality and protection of intellectual property. Ta Ta!

And for another “twist” on telecommuting:

Disclaimer: This post’s contents are for informational purposes only, are not legal advice and do not create an attorney-client relationship. Always consult with competent local employment counsel on any issues discussed here.

Click here to learn more about Janette Levey Frisch, author of The Emplawyerologist.

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