Answers to questions about exempt time records, employee privacy

Employee pay and privacy are two of the most basic, yet potentially problematic issues for HR professionals, but guidance is available. Recently, questions on those two issues were put to a group of attorneys.

To track or not to track
The need to keep track of nonexempt employees’ work hours goes without saying, but is it a good idea to also track the time that exempt employees work?

Some employers fear that they’ll be seen as treating exempt and nonexempt workers alike if they track hours for their exempt employees. Treating those two groups too similarly can endanger an employee’s exempt status.

But other employers think that tracking hours is a good idea in case the U.S. Department of Labor decides an exempt worker actually should be classified nonexempt. With time records to fall back on, the employer isn’t solely at the mercy of an employee’s claims to overtime.

Mark Schorr, a senior partner in the law firm of Erickson & Sederstrom in Lincoln, Nebraska, says both views are valid. The Fair Labor Standards Act (FLSA) doesn’t prohibit employers from tracking hours of exempt workers, and having those records can be helpful if an employee is found to be nonexempt and claims to have worked overtime. But he says employers must take care that exempt employees are truly being paid on a salary basis, i.e., paid the same amount each week regardless of the quantity or quality of the work.

Schorr reminds employers that the FLSA restricts when employers may make deductions from the salary of exempt employees. Deductions can be made when (1) no work is performed in a week, (2) the employee is absent for a full day for personal reasons other than illness or disability, (3) the employee is absent for a full day under a bona fide plan or policy, such as sick leave, (4) the employee violates a safety rule of major significance, (5) the employee is on approved Family and Medical Leave Act leave, or (6) it’s the first or final week of the employee’s employment.

“Therefore, although keeping track of the hours worked by exempt employees will not result in losing the exemption, what you do with that information could be problematic if you use the records to make unauthorized deductions from an exempt employee’s salary,” Schorr says.

Michael G. Petrie, an attorney with Jorden Burt LLP in Simsbury, Connecticut, agrees that tracking exempt hours can be done, but care must be taken. He points out that FLSA regulations note that “employers, without affecting their employees’ exempt status, … may require exempt employees to record and track hours.”

“If you elect to track exempt employees’ hours,” Petrie says, “make sure that you don’t make improper deductions from their wages based on hours worked or take other actions that would show you treat exempt employees as nonexempt workers.”

James F. Kilcur, a partner with Saul Ewing LLP in Philadelphia, reminds employers of the importance of proper classification. “It’s always better to properly classify positions rather than track hours solely for the purpose of being prepared if your company is sued for failure to pay overtime.”

Employee privacy
It’s common policy to inform employees that the contents of their e-mail in company-provided accounts are company property subject to review by the employer, but privacy must also be considered. What if an IT manager decides to routinely read employees’ e-mails – messages that may involve correspondence with HR, workers’ compensation claims, benefit questions, and other sensitive topics?

Such a practice isn’t a good idea, according to Peyton Irby, special counsel in the Jones Walker law firm’s Jackson, Mississippi, office. Routinely reading employee e-mails may put an employer at risk of violating the Health Insurance Portability and Accountability Act (HIPAA) and other laws affecting employee privacy.

Kilcur also says the IT manager’s practice is dangerous. “Although employers are excluded from HIPAA coverage when they keep information on their employees, including medical information, there is a risk of a breach of privacy claim if an employee with no need to know such information has access to and reads it,” he says.

Petrie says although employees generally aren’t entitled to an expectation of privacy for communications on a work e-mail system, there can be risk. He suggests implementing an electronic monitoring policy that spells out what kinds of e-mails can be reviewed, by whom, and under what circumstances.

Schorr agrees that the IT manager “should not have unfettered discretion to monitor all e-mails in all instances.” He says the IT manager should be disciplined and reminded of the requirements of HIPAA and other privacy laws.