Back to basics: FLSA issues during the coronavirus crisis
Your responsibilities under the Fair Labor Standards Act haven’t been canceled during the COVID-19 crisis. If you’ve sent employees home to work and some of those employees are nonexempt, you have a problem—tracking their work hours under the Fair Labor Standards Act. Here’s what you need to know about the FLSA.
Nonexempt employees must be paid for every hour they work. So if you send them home and they’re not working, you don’t have to pay them. Employees can use their accrued time if they have any. If they don’t, they have to take the time off as unpaid time off.
If nonexempts are working from home, you need a way to track their time. Telecommuting is tricky since employees’ managers aren’t around to keep an eye on their working time.
So what can you do? You can go the creepy route and track employees’ keystrokes. Or you can go the uncreepy route and come to a reasonable agreement with your nonexempt employees about their work hours. This is working on the honor system.
Warning: Honorable though it may be, the burden of record-keeping and timekeeping still falls on your shoulders, so this won’t work for employees who already slack off about reporting their time.
The DOL will accept these reasonable agreements, if they’re in writing and cover all the relevant circumstances of employees’ work situation, including details about break and meal times and start and stop times.
Key: These agreements must be true agreements—don’t impose the company’s will on employees unilaterally. The elements of any written work-at-home agreement should include the following:
- Define the core hours during which employees will be working and accessible by phone, email, Slack, Google Hangouts, etc.
- Reinforce that the company’s general policies regarding attendance, etc., remain in effect
- Employees will be responsible for accurately reporting their working time
- Employees must still seek their supervisor’s permission to work overtime
- Employees won’t tinker with company-provided computers or software or disclose confidential information.
On the company’s part, you’ll pay for VPNs, installation and monthly bills for internet access, laptops and hotspots.
Warning: If you find employees produced too much work in the time agreed, the odds are they worked overtime to do it. Don’t turn a blind eye. Their managers should query them but you and pay them for the time. If necessary, you can discipline them for working overtime without first asking permission.
Exempt employees must be paid a guaranteed weekly salary in any week they do any work. So your telecommuting exempts are much easier to deal with—you pay them. And since they’re working from home anyway, it may be a good idea to tap them to go into the office to pick up the mail and perform other administrative tasks.
The FLSA doesn’t require you to provided vacation time. If you have a bona fide benefits plan or provide vacation time, and exempts aren’t working from home, you can require them to use their accrued leave or vacation time. This strategy fails, however, for exempts whose leave banks would result in negative balances due to current debiting and for those who already have negative time in their banks. For them, you must pay them their full pay for the week.
If you close for entire workweeks, you don’t have to pay exempts at all. They may use their vacation or personal time if they have any.
What about reducing their work hours and weekly pay? Back in 2009, the DOL issued two opinion letters to inquiring employers concluding that pay reductions related to future pay aren’t acceptable if they’re made in response to short-term economic conditions.
Note: Opinion letters are intended as private advice from the DOL to a requesting party. They may be used for informational purposes only; they may not be used or cited as precedent.
What would pass muster? It would be acceptable if, on a prospective basis, you permanently reduced exempts’ work schedules from, say, 52 five-day workweeks to 47 five-day workweeks and five four-day workweeks, with an equivalent reduction in pay during those five weeks.
A fixed reduction in salary effective during a period when your company operates a shortened workweek due to economic conditions would be a bona fide reduction not designed to circumvent the salary basis test. In fact, any reduced schedule would probably pass muster, provided it was intended to be permanent.