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In Field Assistance Bulletin (FAB) 2020-5, the U.S. Department of Labor (DOL) issued guidance concerning the requirement under the Fair Labor Standards Act (FLSA) that employers track the compensable work hours performed by teleworkers.

The Bureau of Labor Statistics estimated in 2019 that roughly 24% of working Americans performed some work at home on an average day, and these arrangements have expanded even further in 2020 in response to COVID-19. For this reason, the DOL issued this FAB to clarify the issues in connection with teleworkers, emphasizing that the guidance applies to all teleworker arrangements.

Under the FLSA, employers are required to pay employees for all hours worked, even in cases where the employer did not specifically request the work, but "suffered or permitted" it. (29 C.F.R. Section 785.11-12.)

Further, if the employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. An employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and courts consider whether the employer should have acquired knowledge of such hours worked through "reasonable due diligence." (Allen v. City of Chicago, 865 F.3d 936, 945 (7th Cir. 2017), cert. denied, 138 S. Ct. 1302 (2018).)

Meeting these standards can be challenging in a telework arrangement because employees are working at home, outside of the usual supervisory oversight that exists in the office setting. This FAB explains that one way an employer can meet these requirements is by providing a reasonable reporting procedure in which employees can report their hours of work, including those hours spent on activities not requested by the employer.

If an employee fails to report unscheduled hours worked through such a procedure, the employer is not required to undergo impractical efforts to investigate further to uncover unreported hours of work and provide compensation for those hours.

The DOL notes, however, that (1) having a process for reporting work hours does not constitute reasonable due diligence if employees are prevented or discouraged from accurately reporting their hours and (2) employees cannot waive their rights to compensation under the FLSA. (Craig v. Bridges Bros. Trucking LLC, 823 F.3d 382, 388 (6th Cir. 2016).)

Additionally, if an employer is otherwise notified through a reasonable method of work performed, or if employees are not properly instructed on using a reporting system, then an employer may be liable for those hours worked. (Allen, 865 F.3d. at 946 n.5.)

Ernst & Young LLP insights

Employers will need to review with legal counsel the procedures and systems that are being used by teleworkers for reporting their hours of work, as well as any mechanisms in place to monitor the accuracy of time reporting by teleworkers and to evaluate their production and performance while working away from the office.

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