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Top 5 Compensable Time Issues

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Wage and hour lawsuits predominate all other types of employment litigation: federal and state labor departments continue to vigorously enforce them and employees and their lawyers) routinely seek back pay under them.  The stakes are high because such actions are frequently class-based and seek pay and two or three years, plus attorneys’ fees. Under the Fair Labor Standards Act (FLSA), employees are categorized as either exempt or non-exempt. Exempt employees are paid a salary for all hours worked and do not receive overtime pay. Exempt employees must meet certain criteria under the FLSA to qualify as exempt based on the primary duties. Non-exempt employees are generally paid on an hourly basis. They must be paid for all hours worked in a workweek and receive overtime pay if they work over 40 hours. In order to calculate the amount of money a non-exempt employee should receive, an employer must determine the number of hours of work or “compensable time.” Compensable time or working time is defined as any time the employer permits or allows an employee to perform the activity. This includes all time worked while at the office, work performed at home, and even work that is performed before the regular workday begins.

It is critical for employers to ensure that their non-exempt employees are properly compensated for all hours worked, including all overtime hours.

This top five list highlights some of the common pitfalls for employersand addresses areas of confusion under the FLSA’s complex rules.

1. Waiting Time

If a non-exempt employee is not performing work during a regular workday, but is waiting for an assignment, such time must be considered compensable time because the employee is not free to leave. If, on the other hand, the employee is told that he or she can leave and come back in two hours, that time generally is not compensable waiting time because the employee is free to use the time for his or her own purposes.

2.  Training

Many non-exempt employees attend training programs outside the office. Attendance at training programs and similar activities is not considered compensable time only if all of the following criteria are met:

  • Attendance is outside the employee’s regular working hours,
  • Attendance is voluntary,
  • The training is not directly related to the employee’s job, AND
  • The employee does not perform any productive work during such attendance.

Training is considered related to the employee’s job if it is designed to help the employee handle his or her job more effectively and it is related to the job. If it is training for another job or a new skill, then it is not job-related even if the course improves for their regular work.

When employees attend after hours training, and it is not required by the employer, generally it is not compensable time. Similarly, if an employer offers a training session for the benefit of employees, outside of regular hours, and it is completely voluntary, it is not compensable time. However, if it is during work hours, the time at the session is compensable time.

3. “Off-the-Clock Time”

A non-exempt employee must be compensated for all hours worked in a workweek. This includes work performed that may be outside the employee’s regular workday. For example, a non-exempt employee may report to the office 30 minutes early each day due to a commuter bus schedule. If the employee begins working prior to the start of the regular workday, that time must be counted as compensable time, even if the employee does not record the time on the timesheet. The same requirement applies to the non-exempt employee who brings work home or responds to emails from home before or after the regular workday.

Because compensable time includes “unofficial work” that is condoned, non-exempt employees should be instructed not to perform work beyond their regular work schedule unless they receive prior approval from their supervisor. If an employee fails to obtain approval but performs work, he or she must still be compensated for that time.

4. Volunteer Activities

Employers may offer “volunteering” or “team building” opportunities. If such activity is mandatory for non-exempt employees, it must be counted as compensable time even if the activities are held on the weekend outside normal working hours.

If, however, a non-exempt employee volunteers to work at the employer’s annual dinner outside regular work hours and is not performing work regularly performed by the employee, that can be considered volunteering and any not need to be compensated.

5. Work Performedwhile Commuting

One frequent area of confusion stems from situations where an employee performs work during his or her commute. As a general rule, any work which an employee is required to perform while commuting must be counted as hours worked and compensated accordingly.

This top five list only highlights some of the most common issues in this area. Employers must first make sure employees are properly classified as exempt or non-exempt. Remember that not everyone who is paid a salary is exempt. For non-exempt employees, employers should carefully track hours worked. It is the employer’s responsibility to keep records of hours worked and wages paid to employees. If the records do not exist, the employee’s assertions will be given greater weight. Also, train supervisors to be familiar with overtime requirements for non-exempt employees and to closely monitor hours worked by them.

Posted In: Legal

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