Despite the fact that employers have grown far more sophisticated and are much more careful in publishing workplace policies to protect themselves and their employees, there is one area that most employers don’t think about – what happens outside of the workplace or during an employee’s “off” time. Although it sounds unfair to the employer, there are ways that employers can be held liable for an employee’s off duty conduct, and it is important for employers to anticipate those scenarios and incorporate rules and procedures into their workplaces to try to minimize risk as much as possible.
As there are many areas where off-duty employee conduct can create liability for employers, we will focus on one issue at a time in this column. In this post, we will focus on employees who, without an employer’s permission, perform actual work outside of the workplace and outside of working hours, resulting in situations where they work over 40 hours a week, and what to do to prevent or control liability.
IF AN HOURLY EMPLOYEE CONTINUES TO WORK AFTER HOURS AND OUTSIDE OF THE WORKPLACE, DO I STILL HAVE TO PAY THEM?
Quick Answer: In many cases, yes!
While different states have laws that regulate various parts of the employment relationship (and you should always consult with local counsel about your state’s specific wage and hour laws), the critical law to keep in mind across the country is the federal Fair Labor Standards Act (the “FLSA”). It requires that employees be paid the minimum wage for all hours worked in each workweek, and that employees who are not “exempt” from overtime requirements MUST be paid “overtime” (time and a half) for all hours worked in excess of 40 hours during each workweek.
Most employers have set schedules for their hourly, non-exempt employees, and expect them to conduct work in a specific workplace. Those employers then regularly issue a paycheck that assumes a 40-hour workweek (unless there are deductions for days off, etc.) Let’s assume a hypothetical company, John Doe, Inc. expects all employees to be at work in its corporate headquarters from 8:30 to 5:00pm Monday through Friday. John Doe, Inc. does not permit overtime, and requires all employees to leave the office at 5:00pm sharp. At 5:05pm daily, the last manager to leave locks the door after ensuring all employees are gone for the evening. Does this mean that the Company is safe from allegations that the employees worked more than 40 hours and are entitled to overtime? Unfortunately, NO!
A very large percentage of lawsuits currently brought against employers under the FLSA (many being “collective” actions, similar to “class” actions) are brought under the theory that despite the employer’s “set hours” and “specified workplace,” employees are continuing to work after hours from their smartphone, tablets, laptops, or simply in reviewing files they brought home with them. This usually does not occur because the employee is attempting to do anything inappropriate, rather, he or she may simply want to impress the boss and achieve all given goals for each week, month, or year, service clients in different time zones (or increase their pay if productivity is linked to pay for their job). Even though the employer may not pay overtime as a rule, this does not affect an employer’s possible liability to a non-exempt employee (or group of employees) who works over 40 hours in a workweek by his own choice. The FLSA simply does not allow employees to “choose” to work more than 40 hours in a week and not receive overtime pay for it.
Instead, the question under the law is this:
Did an employer “suffer or permit” an employee to work more than 40 hours in any given workweek? In other words, did the employer have any reason (whatsoever) to know that an employee was working outside of working hours, off the premises, and possibly over 40 hours per week, and did the employer take effective steps to stop that extra work (or pay the required overtime?)
If the employer knew or should have known that the employee was working after hours or on weekends (and thus, working more than 40 hours a week), the employer is then usually considered liable for unpaid overtime wages (and possibly liquidated damages and attorneys fees for the employee(s) involved—plus attorneys fees incurred for the employer who now must defend itself).
When does an employer “know” or when “should it know” that an employee is working more than 40 hours per week?
This is one of the most challenging issues for employers. To put it succinctly, unless an employee openly tells you he or she is working after hours or on the weekend, an employer needs to be actively on the look out for things that indicate work after hours. For example, does the employee send emails or texts to supervisors or management after hours or on the weekends? Does the employee send emails to clients after hours or on weekends and copy management? Are there other documents that have electronic date and time stamps on them that management later reviews that show dates and times that reflect after hours or weekend work? Does the employee turn in lengthy projects first thing on Tuesday morning that were assigned near close of business the previous Monday evening (and its virtually impossible to have completed it without working after hours)? And, in this social media age, does management see communication between employees and potential customers on the employer’s home Facebook page that occur after hours or on weekends?
So, how does an employer avoid liability for this kind of unsanctioned overtime?
Apart from carefully monitoring the work that your employees are doing (more importantly, WHEN they seem to be doing it), the most effective way to proactively manage overtime risk is through a clearly written policy that is signed by all employees on their date of hire (or whenever the policy is adopted) and that is enforced CONSISTENTLY AND WITHOUT EXCEPTION. Jane cannot be treated differently than Joe simply because her project is more important, etc. (unless the decision is made to offer Jane overtime for that project). The policy should be re-issued yearly as a reminder to the workforce. It is also very helpful to post the policy in a break room or near whatever area the employer posts other required legal documents (like wage and hour posters, workers’ compensation contact information, equal employment opportunity posters, etc.) In a perfect world, the “no overtime” policy should be a stand alone policy that is signed by each employee (not simply incorporated into a handbook) and that states that employees are never permitted to work outside of normal work hours or off the premises without express written permission from their manager. However, incorporation into a handbook is helpful as well, so long as the employees are required to sign a handbook receipt and return the receipt to management. Finally, the policy should clearly state that any employee who violates this policy and works outside of the normal and approved working hours (or who works more than 40 hours in a week without pre-approval) is subject to discipline including immediate termination—and this statement must be enforced.
A critical take away for all employers who adopt firm and unyielding “no overtime” policies: Although an employer may discipline an employee for violating this policy (including terminating them), employers can NEVER refuse to pay the employee for any overtime hours they worked (even if they clearly violated the employer’s policy and the employer is choosing to terminate them). Refusing to pay such an employee can subject an employer to civil liability and administrative action (including the possibility of audits of an employer’s overall pay practices by a state agency). Rather, the employer must always pay the overtime earned by the employee (even though it was not previously approved by the employer), and then choose the appropriate discipline (again, even if that discipline is termination).
by Susanne K. Sullivan