DOL clarifies FLSA pay requirements for remote employees

Dive Brief:

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, even if they have a rule against doing such work, the U.S. Department of Labor's (DOL) Wage and Hour Division said in a Field Assistance Bulletin published Aug. 24.
The agency noted that an employer's obligation to pay employees under the Fair Labor Standards Act is based on both "actual knowledge" or "constructive knowledge" of work. The former describes knowledge of regularly scheduled hours via work schedules, employee reports or other notifications, while the latter may be acquired through "reasonable diligence," such as "a reasonable process for an employee to report uncompensated work time," DOL said. "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," DOL said.
The FLSA does not require employers to pay for work they both do not know about and have no reason to know about, the agency said, citing a ruling by the 7th U.S. Circuit Court of Appeals. An employer "is thwarted from preventing the work to the extent it is unwanted, if the employer is not otherwise notified of the work and is not preventing employees from using the system," DOL noted.

Dive Insight:

The agency's notice also confirms to employers that their obligation to make efforts to prevent unwanted work is not unlimited, attorneys with Ogletree Deakins wrote in an Aug. 28 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.'"

In previous guidance, DOL clarified that employers must pay the same hourly rate or salary to workers who telework if telework is provided as a reasonable accommodation for a qualified individual with a disability or if required by a union or employment contract. "If this is not the case and you do not have a union contract or other employment contracts, under the FLSA employers generally have to pay employees only for the hours they actually work, whether at home or at the employer's office," the agency said.

"Work performed away from the primary worksite, including at the employee's home, is treated the same as work performed at the primary worksite for purposes of compensability," DOL said. "Therefore, you must compensate your employee for all hours of telework actually performed away from the primary worksite, including overtime work, in accordance with the FLSA, provided that you knew or had reason to believe the work was performed. This is true even of hours of telework that you did not authorize."

As the COVID-19 pandemic shifts workers to remote status, employers have adapted their compliance strategies accordingly. In some cases, changes to remote-work and telework policies may be permanent, sources recently told HR Dive.

For example, prior remote-work policies may have framed remote work as a privilege for employees with language accompanying this view, meaning that language may need to shift depending on the status of remote work at a given company. Remote work and telework may also qualify as a reasonable accommodation for certain roles. And there may also be harassment concerns around both work forms that need to be addressed by a formal policy.