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With telework arrangements expanding rapidly in response to the coronavirus pandemic, this week the U.S. Department of Labor’s Wage and Hour Division (WHD) issued a Field Assistance Bulletin to clarify an employer’s obligation to track the number of hours of compensable work performed by employees who are teleworking. Although the bulletin from the DOL was spurred by the COVID-19 pandemic, the rules discussed apply to all telework or remote work arrangements.

The Fair Labor Standards Act, the federal wage and hour law that includes minimum wage and overtime provisions, requires an employer to pay its employees for all hours worked, including work not requested but allowed, and work performed at home. See 29 C.F.R. § 785.11-12. If the employer knows or has reason to believe that an employee is performing work, the time must be counted as hours worked. An employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and in litigation, courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence.

While it may be easy to define what an employer actually knows, it may not always be clear when an employer has reason to believe that work is being performed, particularly when employees telework or otherwise work remotely at locations that the employer does not control or monitor. For telework and remote work employees, the employer has actual knowledge of the employees’ regularly scheduled hours; it may also have actual knowledge of hours worked through employee reports or other notifications. One way an employer generally may satisfy its obligation to exercise reasonable diligence to acquire knowledge regarding employees’ unscheduled hours of work is by establishing a reasonable process for an employee to report uncompensated work time. The employer must allow the employee to honestly report all hours worked and cannot implicitly or overtly discourage or impede accurate reporting. Most importantly, the employer must then compensate the employee for all reported hours of work.

If the employer sets up a reasonable reporting process and the employee nevertheless fails to report unscheduled hours worked through such a procedure, the employer is generally not required to investigate further to uncover unreported hours. Though an employer may have access to non-payroll records of employees’ activities, such as records showing employees accessing their work-issued electronic devices outside of reported hours, reasonable diligence generally does not require the employer to undertake super efforts such as sorting through this information to determine whether its employees worked hours beyond what they reported. Moreover, where an employee does not make use of a reasonable reporting system to report unscheduled hours of work, the employer is thwarted from preventing the work to the extent it is unwanted. Failure to compensate an employee for unreported hours that the employer did not know about does not violate the FLSA.

The full text of the Field Assistance Bulletin:

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