Final Overtime Rule Creates New Challenges in Limiting Off the Clock Work

“Off-the-clock” work has become an ever increasing concern for employers in the past few years as the use of smartphones has permeated into all areas of our lives, including work.  The U.S. Department of Labor’s release of its Final Rule revising the “white collar” exemptions of the Fair Labor Standards Act (“FLSA”) has only served to make this issue even more significant.

As reported in this blog, the hand-apple-iphone-smartphoneFinal Rule doubles the minimum salary threshold level for an employee to qualify as exempt from overtime and thus will dramatically increase the number of workers who will now receive overtime pay, resulting in a significant additional financial burden for employers.  Thus, as an employer, the last thing you want to do now is to inadvertently increase your overtime costs even more.  As a result, employers need to seriously consider reviewing their current practices regarding employee use of smartphones during non-working hours.

It likely is standard practice at your company for executives and high-level managers to send emails or even text messages to various supervisors or assistant managers during non-working hours, and to expect quick responses to those messages.  Assuming these supervisors and/or assistant managers are exempt, there is no problem with this practice.  However, once the new rules become effective in December, there is a significant possibility that at least some of these supervisors or assistant managers will be converted to non-exempt employees.  If these employees are already working a 40 hour workweek — which is a fairly safe assumption — the amount of time it takes them to read and respond to these emails or text messages will be considered work, entitling these employees to receive overtime at a rate of 1.5 times their regular rate of pay.

Although the amount of time spent on these tasks may initially appear to be de minimis, this practice is so ingrained that the amount of emails add up quickly, and thus the amount of time (i.e, overtime) spent reading and responding to emails could significantly increase your company’s labor costs.  Furthermore, it is extremely difficult — if not impossible — for an employer to accurately track the amount of time it takes an employee to read and respond to emails.  As an employer, you are required to compensate these employees for however long they claim to have spent reading and responding to your emails, even if the time they claim to have spent seems unreasonable.  If you fail to compensate your employees for all of the time they claim to spend performing these after-hours tasks, you could be opening up your company to significant financial exposure, both on an individual basis, as well as potentially for a class action, as one employee’s complaint could possibly open up the floodgates for other similarly situated employees to make similar claims.

To reduce your company’s financial exposure, there are several steps you may want to take.

  1. Perform an audit of your employees’ classifications –- preferably with the assistance of legal counsel to ensure attorney-client privilege — so that at the very least, your employees are properly classified as exempt or non-exempt based on their salary and job duties.
  2. Limit the use of smartphones to exempt employees, or if that is not possible, create policies instructing your non-exempt employees not to check work e-mail after hours, unless otherwise specifically told otherwise.  Although this would not alleviate your responsibility to compensate these employees for all hours worked if they continue to work while off-duty, you would at least be able to discipline them for doing so.  Such discipline could include suspending an employee’s use of work email after hours, confiscating employer-issued smartphones, or even termination.
  3. If non-exempt employees do respond to emails after work, they must be required to maintain accurate time-records of the time they spend reading and responding to such emails so that your company knows exactly how much to compensate for these activities, and so you are not faced with any allegations of improper record-keeping practices.
  4. Train your managers to wait until working hours to send emails to non-exempt employees.  In short, going forward, you will need to think twice about sending (and expecting responses to) email requests during non-working hours.

Notably, the DOL has set its sights on this very issue.  In its Spring 2015 regulatory agenda, its Wage and Hour Division stated that it would be putting out a request for information on the use of portable electronic devices and other technology away from the workplace and outside of scheduled hours.  Precisely what, if any, regulations the DOL will put out on this front is still unclear, but it is likely that DOL may in fact institute a rule regulating workers’ off-hours use of devices for work-related tasks such as reading and responding to emails.

It is unlikely that the DOL will institute any type of rule as stringent as the legislation recently introduced in France that could potentially make it unlawful for companies of 50 or more employees to send emails after typical work hours, in order to help reduce the high levels of stress experienced by employees.  However, it is worth keeping an eye on that bill as it makes its way through that country’s National Assembly and Senate, as it could provide useful ideas for U.S. employers to determine how best to limit email and other digital communications during non-working hours in the coming months and years ahead.

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