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Time is Money: On or Off the Clock Work?

As published by SHRM's HR Magazine:.  

12/1/2012  By Jonathan Segal 

Time Is Money: On or Off the Clock?  Vol. 57     No. 12  Many managers still don’t understand the Fair Labor Standards Act.  





By Jonathan Segal 








Virtually every week I hear about another employer allegedly requiring, encouraging or tolerating situations in which nonexempt employees are working off the clock. Even large employers with robust compliance programs are not immune to such legal missteps.


Of course, it is not just larger employers being sued. Employers with relatively few workers—that literally cannot afford the cost of defense—are being sued, too.


The goal for employers is not to win "off-the-clock" cases but to avoid them.


Consider these suggestions for minimizing your exposure to such claims and maximizing your chances of winning if such a claim is brought.


Basic Principles


Some strategies for avoiding off-the-clock cases should take employers back to the basics, including training and retraining, enforcing policies that prohibit off-the-clock work, and encouraging managers to report suspected off-the-clock work to HR.


Train and retrain.

Provide supervisors with training that makes clear they cannot require, encourage or even suggest that nonexempt employees work off the clock.


The most important message to convey is that supervisors cannot direct someone to work off the clock, explicitly or implicitly. Also, include guidance on how to address restrictions on overtime.


The untutored have said, "We cannot pay for any overtime." Some employees have heard "work it but don't record it."


Where overtime is not permitted, make clear that "No one is permitted to work any overtime" as opposed to saying, "We cannot afford any overtime."


Let supervisors know that if they break the foregoing rule, they will be subject to discipline up to and including discharge.


Carry a big stick.

Let supervisors know that if they require, encourage or even suggest that an employee work off the clock, they will be subject to discipline up to and including discharge. This prohibition will help prove that deviations were those of a rogue supervisor and not part of an established corporate culture.


Make clear that among the most serious violations would be altering an employee's time to reduce the amount owed to him or her to stay within budget. Almost always, such "wage theft" should result in immediate discharge.


Don't go it alone.

Train supervisors to report incidences to HR if they know, or have reason to know, that an employee may have worked off the clock, even if the employee has not said anything.


In harassment cases, it is not enough to avoid objectionable conduct. If employers have actual or constructive knowledge of it and ignore it, they are condoning it. Doing nothing is not a defense; it is an admission.


The same principle has been adopted in the wage and hour context. Even if employers don't require, encourage or suggest that an employee work off the clock, employers cannot allow it if they have reason to believe it may have occurred.


Supervisors need training on the obligation to report to HR potential off-the-clock work so that HR professionals can talk with the employee and determine whether and what is owed to him or her. If there is a pattern of working extra hours without permission, this may be cause for discipline of the employee, but the employee almost always should be paid.


Clear Policies


Don't leave employees guessing about the organization's policy on off-the-clock work. Spell out the employer's policy on payment for time worked, but make it clear that off-the-clock work is not permitted and that there may be disciplinary action for it. That said, set up a process encouraging employees to report off-the-clock work to HR without fear of retaliation.


Pay up.

Develop a procedure HR professionals can use when they speak with employees who report off-the-clock work.


Use the procedure to determine if they are telling the truth, and then make sure they are properly paid.


If a supervisor reports that an employee has or may have worked off the clock, an HR professional should contact the employee. HR needs to determine whether the employee performed any off-the-clock work and how much time is involved. An appropriate adjustment must be made.


Sometimes, HR professionals make the mistake of assuming that no money is owed as long as the employee does not go over 40 hours in a workweek or eight hours in a day in California. Payment may be owed for off-the-clock work, even if the employee does not become eligible for overtime.


For example, assume that an employee is paid a salary for working 35 hours for a workweek. If the employee works additional hours but is short of 40, the employee generally must be paid for the "gap time."


Be specific.

Develop a policy that prohibits off-the-clock work. Leave no doubt that employees must record all time worked.

Make clear that you will not tolerate any off-the-clock work.


Make clear that you will not tolerate any off-the-clock work and that all work must be on the clock.


A general rule is not enough. Spell it out. For example:


An employee may not do any work before clocking in, and, if he or she does, management must be contacted to override the start time so that he or she will be paid for all time worked.


An employee may not do any work after clocking out, and, if he or she does, management must be contacted to override the stop time so that he or she will be paid for all time worked.


Have an open-door policy.

Develop a complaint procedure with appropriate assurances of nonretaliation so that employees can report concerns without fear of retribution.


There must be a strong policy and a robust complaint procedure. Contacting their supervisors should not be employees' only option. After all, supervisors often are the perceived perpetrators.


At a minimum, employees should be given the option of speaking with HR as an alternative. Employers may want to go one step further and provide another option outside of HR, just in case the problem employee works for HR.


Of course, the policy should prohibit retaliation, which should be defined broadly. If employees don't feel comfortable raising their concern in-house, they could consult with a plaintiffs' lawyer and you could end up in court.


Automated Backup


Technology can be HR's friend or foe in preventing off-the-clock work. On the one hand, time-keeping systems may be adjusted to provide HR with notifications about interrupted meal breaks or other off-the-clock work



While technology may facilitate telework, however, telecommuting poses unique compliance risks to employers, particularly regarding their nonexempt employees.


Tweak time-keeping system.


Determine whether questions should be included in your time-keeping system that ask employees if they have done work off the clock, so that you can follow up with the employees, capture any time worked but not recorded, and then pay them for it.


Most employees are honest, but some are not. How do you protect yourself against those who may claim later that they worked hours off the clock but then bring bad-faith claims?


Most modern time-keeping vehicles include the potential for questions at the beginning or end of each shift. The answers may be helpful in ensuring that employees are paid in real time, as they should be, and in defending against false claims.


For example, at the beginning of every shift, employees can be asked before they clock in if they have done any work since they clocked out on their last shift. If they answer yes, HR should receive notification and speak with the employees.


Similarly, at the end of the day, ask a question about the employee's meal break, such as "Did you enjoy an uninterrupted meal break of 30 consecutive minutes?" If the answer is no, either HR would be contacted to determine if payment is owed or the unpaid meal break would be automatically converted to paid time.


If an employee who responds affirmatively to the meal break query later claims that he or she was interrupted almost every day but not paid, any subsequent allegations are inconsistent with his or her prior answers, sometimes referred to as attestations. This should weigh heavily against an employee's credibility.


Limit telework.

Establish clear rules about whether and when employees may work remotely, such as checking e-mail, and how to ensure that time is properly documented and paid.


Sometimes it is your hardest-working employees who can cause trouble in this area because they log in at all hours and perform work. While their intentions are likely noble, you could pay a handsome price for such dedication.


Set boundaries for remote work, even for stellar employees. For example, you could block remote access to your network by nonexempt employees. Or, you could allow access only if approved and provide guidance on how to record the time to ensure proper payment.


A similar issue arises with personal digital assistants. The safest policy legally is to deny your nonexempt employees smartphones, BlackBerry devices and the like. But is that smart from a business perspective?


There may be times when nonexempt employees need these devices, so set limits as to when they can use the devices and pay them appropriately.


For example, you might set a specific block of time outside of working hours when a marketing employee away on business can use his or her BlackBerry. If you allow such periodic use, under the continuous day rule your duty to pay could be continuous, too.


Even if you have not developed specific policies yet, if you have reason to know an employee may have done work remotely, you must speak with the employee and pay him or her accordingly.


To illustrate this point: A client forwarded me an e-mail from her assistant regarding information that we needed to respond to a U.S. Equal Employment Opportunity Commission charge. The message was "Good news. See below."


My response: "Not really. See when your nonexempt assistant sent it to you!"


The author, a partner with Duane Morris in Philadelphia and managing principal of the Duane Morris Institute, focuses on counseling, training and strategic planning to minimize litigation and unionization.






















































































































Meditate and Then Read: Off Duty Policies and the NLRB

As published by SHRM's We Know Next: my latest article can be found here.

Many employers have rules that prohibit employees from returning to work while they are not on duty.  These rules are designed to keep order but they also have the effect of limiting employee access to engage in union activity while off duty.

The NLRB has long held that a rule barring off-duty employees access to the workplace is valid only if:

  1. It is limited solely to the interior of the facility
  2. It is clearly disseminated to all employees (so it must be in writing)
  3. Is applied to off duty access for all purposes, not just union activity. Tri-County Medical Center, 22 NLRB 1089 (1976).

In addition to the above, the policy must not be implemented in response to union activity. Otherwise, the Board will find anti-union animus.

Last year, the Board applied Tri-County to a case in which employees were called back to Company-sponsored events, such a retirement party or baby shower.  The Board held that the employer’s inviting off duty employees to return to the Company’s premises violated the rule so that it could not be applied to employees returning to the premises to engage in union activity.  Saint Johns’ Health Center, 357 NLRB NO.  170 (2011)

The Board objected to the employer’s reservation of its right to invite employees to return to its property whenever it wanted.  “The employer is telling its employees, you may not enter the premises after your shift except when we say you can.”

The Board obviously ignored the difference between the “employer acting as employer” providing direction to its employees and the employer acting as “traffic cop” in terms of when off duty employees can return to the workplace on their own initiative.  The NLRB’s analysis makes sense to me when applied to the latter but not so when applied to the former.

The message from the Board’s decision:

  1. Do not include a broad reservation of rights unless you want the Board to say you have no rights.
  2. If you want to host a special event, such a holiday or retirement party, consider a local restaurant or other location.  It is not without cost but inviting employees back to your workplace while they are off duty is not without risk either.

Note:  calling “on call” employees into work is not asking them to return off duty. To the contrary, you are asking or requiring that they be on duty. 

Last month, the Board decided another case involving off duty employees, Sodexo America LLC, July 2, 2012. The employer in the case is a hospital and it had an off duty policy that included three (3) exceptions:

  1. Visiting a patient
  2. Receiving medical treatment
  3. Conducting hospital-related business

The Board held the first two exceptions did not violate Tri-County.  Critically, in those circumstances, when the employees returned to the workplace in a different capacity, they were treated like all other non-employees. For example, when employees were visitors of patients, they complied with all of the rules which applied to other visitors, such as wearing a badge and having only the same access as non-employee visitors.

However, the Board held the third exception violated the NLRA.  The Board “reasoned” the rule violated the NLRA because it gave the employer “free reign to set the terms of off duty access.” The Board noted in a footnote that even something as “innocuous” as allowing employees to pick up pay checks may render a rule lawful on its face discriminatory in its application.

Again, what does this mean for employers:

  1. Be careful of reserving your rights in the policy or you may end up with no rights
  2. Make sure employees who return to work in a different capacity have no greater rights than non-employees and are subject to the same restrictions as them.  We all know that health care workers and retail workers are in the unions’ cross hairs. I already have discussed health care workers. What would this mean for retail workers? When they shop, they cannot access “employee only” areas for starters!

A difficult case is when an employee asks to return to work to pick up a paycheck.  Does this automatically give employees rights to access the property for other purposes?  The Board might say “Yes,” although hopefully a court reviewing the issue would say “No.” One simple solution is for the employer representative to meet the employee in the exterior of the building, if possible.

There are other difficult issues, such as allowing employees to return to the  premises to share a meal in a non-public cafeteria with family members or friends who also are employees of the company.  For example, a husband and wife work for employer.  Wife is working. Husband is off.  Husband returns off duty to have dinner with his wife in the company’s non-public cafeteria. This would appear to violate the Board’s all or nothing  “analysis.”  A victim of the NLRB’s assault on management rights could be family and other relationships.

In these cases, prohibiting such access may avoid the legal risk.  But it may create an employee relations problem which could serve as the catalyst for union activity.

It is policy that the Board’s analysis may apply beyond just off-duty employees. It could have broader implications for Solicitation and Distribution policies where the employer invites 3rd parties onto its property. But I will need to meditate more before I can write about that!

Employers need to evaluate carefully the current decisions by the NLRB recognizing that sometimes the most cautious legal approach is the riskiest in terms of employee relations.



Wage and Hour Revolution

It is an honor to post my first article for Fortune/CNN:

This blog should not be construed as legal advice, as pertaining to specific factual situations or as establishing attorney-client relationship.

Thank you.


Sisyphus Had It Easy


Sisyphus Had It Easy

by Jonathan Segal on November 9, 2011   

In Greek mythology, Sisyphus was a king punished by being compelled to roll an immense boulder up a hill, only to watch it roll back down. No matter what he did, Sisyphus could not get to the top of the hill.

We can all feel Sisyphus' pain as HR and other executives. We are constantly rolling up against regulatory boulders, plaintiffs' lawyers and labor unions marketed by the NLRB.

But Sisyphus had it easy in one respect. He did not have to worry about the FLSA.

We are in the middle of a wage and hour revolution. More specifically:

The number of FLSA cases filed per year has nearly quadrupled since the late 1990's

DOL back wages collected in 2010: $175,652,665

Employees receiving back pay wages in 2010: 208,615

DOL concluded cases in 2010: 26,815

FLSA cases filed in district courts in 2010: 6,081

FLSA cases filed so far in district courts in 2011 so far are close to 5,000.

One of the most common allegations is that employees are required to work "off the clock" but are not paid. Indeed, it is often now referred to as wage theft.

Although only one area of exposure, it is a big one. And, it is one that can be addressed readily quickly and easily.

Here are five recommendations that will minimize your organization's exposure in this area:

  1. Have a wage and hour policy that includes a statement that no manager, supervisor, etc. can require, encourage or even suggest that an employee work off the clock.
  2. Develop a complaint procedure for employees to report any circumstances in which they believe that they have been required, encouraged or even suggested to work off the clock (with appropriate assurances, such as non-retaliation).
  3. Educate your supervisors and managers on their need to contact HR if they have actual or constructive knowledge that an employee may have worked off the clock so that HR can talk with the employee and ensure that the employee is properly paid.
  4. Focus on "off hours" work, for example, limit use of PDAs or access to your e-mail and make sure that, when use is permitted, employees record and are paid for their time.
  5. Develop a mechanism for employees to report or record time they have worked but which may not be reflected on their hard copy or electronic time card or record (for example, an edit form for employees to add time that they have worked between shifts).

Remember, earlier this year, the U.S. Department of Labor announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. The DOL also has even developed and published an old fashion hard copy calendar for employees to use to record their time.

Want to trade roles with Sisyphus for a day?

This blog post should not be construed as legal advice, pertaining to specific factual situation or establishing an attorney-client relationship.

Jonathan A. Segal is a partner at Duane Morris LLP in the Employment, Labor, Benefits and Immigration Practice Group . He is also the managing principal of the Duane Morris Institute . The Duane Morris Institute provides training for human resource professionals, in house counsel, benefits administrators and managers at Duane Morris, at client sites and by way of webinar on myriad employment, labor, benefits and immigration matters. Read Jonathan's blog at the Duane Morris Institute or follow him on Twitter @Jonathan_HR_Law .


Jonathan Segal

Business Ally. Help clients achieve business goals and manage legal risks. Areas of focus include: gender equality; wage and hour compliance; social media; leadership training; union avoidance; performance management; and agreements

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