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BlackBerry® and iPhone® Use May Lead to Overtime

In today’s technological climate, it seems that almost every employee, from the CEO to the rank-and-file worker, uses some type of personal digital assistant (PDA) or BlackBerry® device.

PDAs, BlackBerries®, iPhones®, and other so called “smart phones” have a number of uses: calculator, clock, calendar, video recorder, address book, word processor, radio, and even Global Positioning System (GPS) device. They can also be used to access the Internet, create and write on spreadsheets, and play computer games or as mobile phones and portable media players. But most important, PDAs can be used to send and receive e-mails.

In addition, at a time when the stock market fluctuates and the presidential candidates debate over how to solve the nation’s complex economic problems, employees are becoming more and more concerned about job security. Without a doubt, the job market in America is becoming more competitive as businesses, large and small, work to maintain revenues and keep afloat during the recession.

All of that has resulted in what could be deemed a “perpetual workplace” in which employees at all levels find themselves working harder and longer hours to stand out in the crowd. Many employees can’t easily separate the time they’re working from the time they aren’t.

Even when they leave the workplace at night or are outside the office during lunch, on weekends, or on vacation, they increasingly are checking or typing away on their BlackBerries® and iPhones®, responding to work-related e-mails. So if those hardworking employees are non-exempt employees under the Fair Labor Standards Act (FLSA), is the time they spend on their PDAs compensable? Some say it is.

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FLSA’s overtime provisions
The FLSA generally requires covered employers to pay employees at least the federal minimum wage for all hours worked and overtime premium pay of one and a half times the regular rate of pay for all hours worked over 40 in a single workweek.

The law includes a number of exemptions from its minimum wage and overtime requirements, including for workers employed in a bona fide administrative, executive, or professional capacity or as an outside salesperson.

It also provides an exemption for certain computer employees. Employees who fit into any of the exemptions are deemed exempt employees because they are exempt from the FLSA’s overtime provisions. Employees who don’t fit into any of the exemptions are deemed non-exempt employees since they aren’t exempt from — and therefore must be paid according to — the FLSA’s overtime provisions.

The general rule is that non-exempt employees must be paid for “all hours worked.” The standard used to determine whether time is actually “hours worked” is whether the employee is “suffered or permitted to work.”

A non-exempt employee who isn’t compensated for “all hours worked” can claim up to two — and in some cases three — years of back overtime or wages. Additionally, the FLSA provides a mechanism for employees to file class-action lawsuits for unpaid overtime on their own behalf and on behalf of similarly situated employees.

Consequently, it’s imperative to properly classify employees as exempt or non-exempt under the FLSA’s provisions and guidelines. The administrative exemption is available if an employee’s primary duty relates to management or general business operations and requires discretion and independent judgment about “matters of significance.”

The executive exemption is available if an employee’s primary duty involves managing a business, directing two or more subordinates, and hiring or firing other employees. Also, any employee involved in management who has at least a 20 percent equity interest in the business can be considered exempt.

The professional exemption is available if an employee’s primary duty involves performing work that requires some specialized knowledge generally acquired through a four-year college degree. That usually means the work must be varied and intellectual and must consistently involve the use of judgment, as opposed to the occasional exercise of independent judgment that the administrative exemption requires.

Outside salespersons may be classified as exempt if they regularly work outside their employer’s place of business and their primary duty is making sales or obtaining contracts or orders. Finally, generally speaking, computer employees may be classified as exempt if they work as computer systems analysts, computer programmers, software engineers, or other similarly skilled computer employees.

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What’s the danger?
The use of PDAs, BlackBerries®, and iPhones® by non-exempt employees is a hot topic right now in the labor and employment arena. A new wave of lawsuits may be brewing on the theory that non-exempt employees who use smartphones to send and respond to work- related e-mails after hours should be paid for that time.

Internal complaints about not being compensated for “PDA time” will most likely come from disgruntled employees, but there’s a risk involved for all non-exempt employees. The time an employee spends on his PDA, BlackBerry® or iPhones® outside the office can really add up, and you may find yourself in the difficult situation of defending a lawsuit in which an employee claims to have worked a great deal of overtime but your records don’t reflect the actual number of hours he worked.

Indeed, time worked outside the office is very difficult for an employer to track. Although smartphones may leave time- and date-stamped e-mail trails indicating when a message was sent or received, they don’t show how much time the employee spent reviewing and thinking about an e-mail or how much time he spent drafting a response. Thus, you should take precautions now.

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What you can do now to avoid liability
The biggest danger with non-exempt employees using PDAs, BlackBerries®, and iPhones® after working hours is the potentially misclassified worker. In that situation, the employer has been treating the worker as exempt and therefore not tracking her work hours. If the worker files an FLSA claim, there will likely be a factual dispute over the amount of hours she actually worked.

First, you should conduct an internal wage-and-hour audit or work with employment counsel to ensure that you are properly classifying your current employees and aren’t classifying employees who are really non-exempt as exempt.

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To further prevent an overtime lawsuit, employers should head off problems before they occur by creating, with the aid of counsel, specific policies and procedures that address non-exempt employees’ use of PDAs, BlackBerries®, and iPhones®. A company’s policies and procedures should state, at a minimum, that non-exempt employees must report any work time spent using smartphones .

Businesses also should consider placing limits on when non-exempt employees can use the devices after hours. Some employers may want to require that employees first get permission before using their PDAs or BlackBerries®, and iPhones® after work hours, while others may choose to sidestep the issue altogether by issuing company-owned devices only to exempt employees.

Keep in mind, however, that if a non-exempt employee purchases her own smartphone and uses it to perform work outside the office, you may still be liable for overtime claims, even though the device wasn’t company-provided.

Finally, be mindful of how much and how often you encourage your employees to use PDAs, BlackBerries®, and iPhones®. Some employers expect their employees to be constantly accessible through some form of communication. In other workplaces, employees independently check their smartphones, even if there’s no formal requirement or expectation that they do so.

In either case, non-exempt employees should be advised by their employer that it don’t expect them to spend more than a minimal amount of time checking messages from outside the office and that they should report on their time sheets any time spent outside work checking e-mails when it exceeds a minimal amount.

Learn more about correctly classifying employees with the Wage and Hour Compliance Manual