You recently read an article stating that a court found that a major national retailer owes overtime pay for work performed "off the clock" by workers in 27 stores. News reports talk of a $50 million price tag for a settlement of similar claims against the same employer in Colorado, and lawsuits have been filed in nearly 30 other states.
You have also heard the story of a Chicago woman fired from her job after she was caught working on her lunch break. Why would an employer fire an employee for seemingly going the extra mile? Perhaps because experienced HR professionals and other business people know that these and other issues involving employee pay have become one of the most complex and litigious areas involving employees and employers.
The primary source of wage and hour regulation is the Fair Labor Standards Act (FLSA), which establishes a minimum wage and a 40-hour overtime standard for covered employees. But the FLSA does not stand alone in the federal regulation of wages and hours. Most states also have their own laws regulating wages and hours. An employer must comply with both state and federal law. Where the state and federal law impose different requirements, the employer must follow the standard that is most beneficial to the employee.
So what is "off the clock" work?
Working off the clock covers a wide range of activities, both authorized and unauthorized. It may involve deliberate falsification of time records and coercion of extra, unpaid work. It may just be a dedicated worker, like in Chicago, who voluntarily works during lunch or after hours to take care of a customer or finish a report. Or it may be ignorance of an employer or supervisor as to just what activities must be counted as working time.
Whatever the situation and no matter the size of the company, employers need to know what to be on the lookout for, and understand their obligations in resolving the issues.
Consider these common problem areas:
- Pre-clock activities, such as opening the store, donning uniforms or warming up trucks
- Arriving workers who rush to help customers before clocking in
- Working into or through the meal hour
- Staying over to finish with a customer
- Staying late to clean up or balance accounts
- Meetings or training outside normal hours
- Stocking or inventory outside normal hours
- Time spent on call or standing by if needed
- Working at home
All of these activities occur regularly in every workplace and all are generally considered to be compensable work. This is true regardless of whether management requires them or employees perform them voluntarily. If management knows about the conduct and fails to stop it, the company is liable. It should be noted that not all training or on-call circumstances require compensation.
Practical Steps for Minimizing Off-the-Clock Claims
So how can employers avoid such protracted and messy disputes? At a minimum take the following steps:
- Establish Responsibility for Compliance - It is essential that there be an individual who possess the necessary skills that is specifically designated to be responsible for wage and hour compliance.
- Establish & Maintain Compliant Policies & Practices - Employers also should ensure that policies and practices are in place that ensure wage and hour compliance. Policies should be communicated to employees. Employers also should have internal policies and practices in place, including accurate time-keeping systems.
- Establish Training Programs - Having compliant policies and practices in place do not insulate employers from liability if they are not implemented properly. In many areas, managers are on the front lines of ensuring wage and hour compliance.
Finally, employees who perform off the clock work deserve compensation for the additional hours they have worked. Pay them and then make a determination as to why it happened – a dedicated but misguided employee is a much different situation and comes with much less potential damages and negative publicity than a manager telling employees to clock out but continue working.
As always, it is imperative to know and understand all of the regulations that apply to your business at all levels: federal, state, and local. Failure to know and apply these regulations can lead to hefty fines and negative public perception for the company.
As seen in Business First of Louisville.© 2013 Dinsmore & Shohl LLP. All rights reserved.