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Preventing Unauthorized Overtime by Employees Working From Home

In a society that’s increasingly dependent on technology, it’s important to consider some of the problems that could arise for technologically savvy employees who are allowed to work from home. Some employees who work away from the office by using devices like laptop computers, BlackBerries®, iPhones®, cell phones, and pagers will claim they worked overtime when using those devices. Additionally, with more and more employees “telecommuting,” it can become increasingly difficult to monitor an employee’s overtime.

The following is a brief review of the overtime pay labor laws and tips for helping employers prevent paying unauthorized overtime to employees who work away from the office. The Fair Labor Standards Act (FLSA) doesn’t place limitations on the number of hours an employee can work in any week, but employees covered by the Act must be paid overtime wages for any hours worked in excess of the 40-hour workweek.

Learn more about wage and overtime laws with the Wage and Hour Compliance Manual

Overtime claims for ‘at-home work’
Laptop computers, smartphones, and other electronic devices now enable employees to take unfinished work home. In some cases, you may allow employees who don’t finish all their work at the office to take the work home. In such a situation, however, it’s difficult for you to monitor how much overtime the employee actually worked. The employee may then claim that he worked more overtime hours than you contemplated. Or in other cases, you may be unaware that an employee is doing overtime work from home until he turns in the time record for the week. In that situation, you still may be liable for the overtime pay if you knew or had reason to know that the employee was working from home.

Under the FLSA, employers must pay employees overtime for any hours worked over 40 in a workweek, regardless of whether the employee works at the office or at home. Further, if you learn that an employee is working overtime from home, you must pay him for that time, regardless of whether he makes a claim for it. If an employer don’t want an employee to work overtime, it must implement a policy that overtime is allowed only with prior approval from the employee’s supervisor.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including overtime and FLSA requirements

Telecommuting employees
The trend to allow employees to telecommute is increasing. While telecommuting can be a useful tool to both employers and employees, it can present some difficult issues under the FLSA.

Of course, with telecommuting employees, it’s difficult for you to accurately track the number of hours they work. Employees who work from home part of a workweek are essentially working under an honor system. Although a telecommuting employee’s claim that she worked overtime is difficult to verify, you’re required to compensate her for the hours she claimed to have worked, including overtime. Again, with regard to overtime, employers should clearly set out an expected work schedule and make clear that working overtime requires advance permission. For employees who telecommute, it’s especially important to keep the lines of communication open.

Employers may be able to avoid the difficulties inherent in telecommuting through use of the “homeworker’s exception” to the FLSA’s minimum wage and overtime requirements. That exception may allow you to pay an employee according to a reasonable compensation agreement instead of the FLSA’s specific hourly rate requirements.

Two requirements must be met before the exception can apply. First, there must be periods of the employee’s day spent at home when she is free from her job duties. Second, you and the employee must have reached an agreement for the number of hours worked. This exception, however, doesn’t apply to an employee who works a standard eight-hour day/40-hour week and works consistently throughout the day.

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Information services employees’ ‘help desk’ and ‘on call’ time
Another growing class of employees is “information services employees” or “help desk employees.” Many of these employees are required to be “on call,” either from the office or a remote location. For instance, an employee may have calls directed to him at home. The employee must be compensated for that time if he wasn’t free to use it for his own purposes. The following is a list of factors courts have used to determine if an employee must be compensated for on-call time:

  • a requirement that the employee remain on the premises;
  • excessive geographical restrictions;
  • the frequency of calls;
  • fixed time limits for responses to calls;
  • the ability to trade the on-call responsibilities;
  • the ability to ease restrictions; and
  • whether the employee actually engaged in personal activities during the on- call time.

The above list isn’t exhaustive, and no one factor is conclusive.

Audit your policies and practices with the Employment Practices Self-Audit Workbook

Bottom line
The bottom line is that you need to communicate with employees regarding the number of expected hours to be worked. To avoid unwanted overtime claims, you should implement a written policy requiring employees to get permission from a supervisor before working overtime. In addition, an employee who wants to take work home and earn overtime should get express permission from you. When the employee requests permission, you can then discuss the exact amount of overtime that should and may be worked.