The U.S. Department of Labor Wage and Hour Division (“WHD”) continues to issue COVID-19 related guidance for employers on how provisions of federal labor and employment laws, such as the Fair Labor Standards Act (“FLSA”), the Families First Coronavirus Response Act (“FFCRA”), and the Family and Medical Leave Act (“FMLA”), are addressed in light of the ongoing pandemic. Specifically, the DOL released FAQs related to telework, flexible schedules, telemedicine and the FMLA, COVID-19 testing requirements when returning from FFCRA leave, and FFCRA leave availability before and after furlough. For more information about COVID-19 related FMLA and FFCRA guidance, please visit out blog posts here and here. This article provides an overview of FLSA guidance issued in response to COVID-19 and the rapid increase in telework arrangements.
- Telework is treated the same as work performed at the employer’s primary worksite for purposes of determining compensability of time for non-exempt employees;
- Employers must compensate non-exempt employees for all hours of telework actually performed (authorized or not) if the employer knows or has reason to believe the work was performed;
- If an employer sets up a specific timekeeping system and an employee does not report their time, the employer is not required to take impractical steps to uncover unreported telework hours;
- Employers who provide schedule flexibility need only compensate employees for all hours actually worked in a given day despite the continuous workday rule;
- Guidance clarifies that taking paid sick leave or expanded FMLA leave under the FFCRA will not affect an employee’s exempt status;
- During a declared public health emergency, employees who are otherwise exempt may temporarily perform non-exempt duties that are required by the emergency and maintain exempt status;
- An Employer may prospectively reduce exempt employees’ salaries for economic reasons related to COVID-19 or a related economic slowdown so long as those reductions are pre-determined and bona fide.
FLSA Guidance Addresses Compensable Time Related to Teleworking
In a telework arrangement employees can access their work e-mail, phone, and computers at all hours of the day creating an opportunity for employees to work off-the-clock and raise the risk of unpaid overtime and improper tracking of compensable time. The latest FLSA guidance discusses exempt status issues as it relates to telework and compensable time under federal law. Under the FLSA an employer is required to pay employees for all hours worked. This may include work that is not requested by an employer but “suffered or permitted,” including work performed at home or otherwise remotely. Therefore, an employer’s obligations to track and pay for hours worked by non-exempt employees is the same regardless of where the work is performed.
How Does an Employer Determine Hours of Compensable Work for Employees that are Teleworking?
An employer must compensate an employee for all hours of telework actually performed away from the primary worksite, including overtime work, in accordance with the FLSA, provided the employer knew or had reason to believe the work was performed. This is true even for hours of telework that an employer did not authorize. In most cases, an employer may satisfy their obligation to compensate a teleworking employee by providing reasonable time-reporting procedures and compensating that employee for all reported hours. (FAQ 14)
What are an Employer’s Obligations under the FLSA to Track and Pay for Telework?
On August 24, 2020, the WHD issued a Field Assistance Bulletin (“FAB”) providing guidance on employers’ obligations under the FLSA to track and pay for the hours of compensable work performed by employees who are working remotely. The FAB guidance applies a “reasonable diligence standard” to help employers determine when they need to pay their nonexempt employees for work they had reason to believe was performed. The FAB provides that employers can exercise reasonable diligence by setting up a process for employees to report their time as long as the employer does not expressly or implicitly prevent or discourage employees from accurately reporting work time under those procedures. If an employee then fails to report unscheduled hours worked through the established reporting procedure, the employer is not required to take impractical efforts to investigate further.
If an Employer Provides Flexibility in Work Schedule must they Compensate Employees for all Hours between Starting Work and Finishing Work under the Continuous Workday Rule?
No. While in general, all time between the performance of the first and last principal activities of a workday is compensable work time, the WHD recognized that applying this continuous workday guidance to teleworking arrangements would discourage needed flexibility during the COVID-19 emergency. An employer that allows employees to telework with flexible hours during the COVID-19 emergency does not need to count all the time between an employee’s first and last principal activities in a workday towards hours worked.
For example, assume an employer and employee agree to a telework schedule of 7–9 a.m., 11:30–3 p.m., and 7–9 p.m. on weekdays. This allows an employee, for instance, to help teach their children whose schools are closed, reserving for work times when there are fewer distractions. An employer must compensate the employee for all hours actually worked—7.5 hours—that day, but not all 14 hours between the employee’s first principal activity at 7 a.m. and last at 9 p.m. (FAQ 15)
Can an Exempt Employee Perform other Nonexempt Duties during the COVID-19 Public Health Emergency and Continue to be Treated as Exempt?
Yes. During the period of a public health emergency declared by a Federal, State, or local authority with respect to COVID-19, otherwise-exempt employees may temporarily perform nonexempt duties that are required by the emergency without losing the exemption. WHD regulations permit an exempt employee to perform nonexempt duties during emergencies that “threaten the safety of employees, a cessation of operations or serious damage to the employer’s property” and which are beyond the employer’s control and could not reasonably be anticipated. Employees who are temporarily required to perform nonexempt duties due to COVID-19 may do so without losing the FLSA exemption, as long as they continue to be paid on a salary basis of least $684 per week. (FAQ 16)
Is Hazard Pay Required under the FLSA during the COVID-19 Pandemic?
No. The FLSA does not require hazard pay; FLSA generally requires only payment of at least the federal minimum wage (currently $7.25 per hour) for each hour worked and overtime compensation for each hour over 40 worked in a workweek in the amount of at least one and a half times the employee’s regular rate of pay. However, employers should be aware that state or local laws may impose other obligations related to hazard pay. (FAQ 17)
Will an Employee Lose Exempt Status if they take FFCRA Leave?
No. Taking FFCRA leave will not affect exempt status or eligibility for any exemption from the FLSA’s minimum wage and overtime requirements.
For example, if an employee takes paid sick leave or expanded family and medical leave on an intermittent basis, doing so will not be construed as undermining being paid on a salary basis for purposes of the exemptions under FLSA Section 13(a)(1) and the regulations at 29 CFR Part 541. (FAQ 18)
Will an Exempt Employee Lose their Status if an Employer Reduces Salary During the Pandemic or Economic Slowdown?
Generally, an employer may prospectively reduce the amount regularly paid to a salaried exempt employee on a predetermined basis based on the employer’s economic reasons related to COVID-19 or a related economic slowdown. Any such salary change must also be bona fide, meaning the change is not an attempt to evade the salary basis requirements and is actually because of COVID-19 or an economic slowdown as opposed to the quantity or quality of work performed by the employee. If an employer properly reduces an employee’s salary under these conditions and requirements, an employee will not lose their exempt status, as long as the employee still receives at least $684 per week on a salary basis. (FAQ 19)
Given the practical issues created by telework arrangements as a result of COVID-19 and the complexity of FLSA rules on hours worked, employers should consult with employment law counsel to determine how best to update existing policies and exercise “reasonable diligence” in setting up a reporting procedure for hours worked.
Employers may also want to consider the following when crafting a telework reporting procedure:
- Employers should ensure that their processes for prompt and accurate reporting of and payment for hours worked are in place;
- Consider requiring employees to certify the accuracy of telework time records;
- Ensure non-exempt employees are informed of proper time reporting procedures and advised that unauthorized work is a violation of the employer’s policies;
- Employers should address instances of unauthorized work and be sure to follow FAB guidance and compensate employees for all hours worked that they know, or should know about.
- COVID-19 and the Fair Labor Standards Act FAQ
- COVID-19 and the Family and Medical Leave Act FAQs
- COVID-19 and the American Workplace
- FFRCA Frequently Asked Questions
- Sequoia Blog: FMLA Focus: Certification and Re-certification for FMLA Absences
- Sequoia Blog: What Employers Need to Know About FFCRA Regulations and Additional FAQs
Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved