For instance, some employers encourage employers to telecommute two or three days a week. With the increased focus on the environment as well as work-life balance issues, telecommuting is a trend that will continue to grow.
Telecommuting presents employers with an extra challenge of maintaining accurate records of an employee’s regular and overtime hours. Since the work of telecommuting employees is conducted substantially or completely outside of the traditional workplace, employers are faced with difficult monitoring problems. As a result of such obstacles, employers are typically forced to rely solely on the employees to maintain accurate records of the hours worked during a workweek. Although telecommuting may offer benefits in terms of flexibility and productivity, employers should be aware that the drawbacks may be significant where nonexempt workers are involved since the inability to maintain adequate and accurate records may place employers at a serious disadvantage in enforcement proceedings.
Once an employer decides that one or more of its employees can work from home, it should carefully consider which employees will telecommute and what sort of work they will be assigned. As a general rule, employers should permit telecommuting only with reliable employees who are self‑motivated and consistently do good work. Employers will have far less to worry about with a known-trustworthy worker. Assigning clear project deadlines and requiring frequent contact and updates with the main office will further facilitate an employer’s need to monitor its employees’ work.
If the employee is not exempt from the Fair Labor Standards Act (FLSA), the employer faces the obligation of maintaining accurate time records for the employee. This may be done with time sheets filled out by the employee or by having the employee login on a computer or phone in at the beginning and end of their work hours.
For hourly workers or salaried, nonexempt workers, employers may be concerned an employee will be tempted to exaggerate time records. One way to potentially reduce this behavior is to require employees to sign their time sheets certifying the hours they submit are correct. An employer that suspects exaggeration should pay the employee for the suspect hours, but then take other disciplinary measures if there was misconduct or falsification of hours. Because the worker is nonexempt, he or she may be suspended without pay. Revoking the telecommuting privilege could be another effective sanction short of termination for the employee who over‑reports hours.
At the opposite end of the spectrum, an employer must ensure nonexempt telecommuters who exceed their regular work hours are properly paid overtime. The FLSA’s overtime provisions apply to those working at home just the same as those who punch in at an office or factory. Nonexempt employees must be required to accurately report all time worked. An employer that suspects an employee is working unreported overtime has a duty to investigate and to make sure the employee is paid for the hours.
Employers do not escape their overtime responsibilities merely by instructing telecommuting employees not to work overtime. Even if the employees are not authorized to work overtime, the FLSA requires they be paid for that overtime if the employer knew or should have known the employees were working those hours.
It is thus essential for employers to make sure their employees keep accurate accounts of their time and that employers frequently verify this time. The FLSA places the responsibility of recordkeeping on the employer. If a dispute over hours arises later and the employer has failed to maintain accurate records, the DOL will believe the employee’s version.
Adopting a clear policy
Employers should adopt a clear, detailed policy regarding telecommuting. Such guidelines should cover specific hours requirements, methods of recording time, when a telecommuting employee should report to the office and when and how that employee should take breaks. That way, both telecommuters and their employers will know from the start exactly what is expected of each of them.
Homeworkers are covered by the minimum wage and overtime provisions of the FLSA.
Prohibited work from home
However, DOL regulations prohibit certain types of production work in an employee’s home unless the employer has obtained a certificate from the DOL permitting such work.
For example, the DOL will issue certificates allowing homeworkers to manufacture knitted outerwear, gloves and mittens, buttons, buckles, handkerchiefs, embroidery, and allowing homeworkers to string beads or package jewelry. The manufacture of women’s apparel and most jewelry is generally prohibited.
In addition to the normal records required by the FLSA, employers must maintain additional records for homeworkers.
Specifically, the FLSA requires that each employer maintain records, by “lot” of work assigned to the employee for homework, which indicate:
- when work was given or begun
- when work was turned in
- the amount of work completed
- the kind of articles worked on
- the hours worked for each lot
- the wages paid for finished lots
A separate handbook that can be obtained from the DOL’s Wage and Hour Division must be kept for each homeworker. The homeworker records the proper information that the employer then uses to compute wages. Completed handbooks must be maintained for two years. This includes handbooks of terminated employees.
Commonly asked questions and answers
Q. We don’t pay homeworkers by the hour. We simply assign them a bulk project, and they get paid a lump sum upon completing the project. Do I still need to keep track of their hours?
A. Yes. Assuming these employees are performing the type of work that does not qualify for an exemption, employers are obligated to pay them at least $7.25 per hour plus overtime for weekly hours worked in excess of 40. Thus, while payment in a lump sum (piece rate) is legal under the Act, the employer must still show that the sum, when divided by number of hours worked, still comes out to at least minimum wage. Employees must be paid an additional one‑half of this hourly piece rate for each hour worked more than 40.
An employee gets paid $100 for each piece of embroidery he finishes. The employee completes five pieces of embroidery in one week. It took him 45 hours to complete the embroidery. The employee’s piece rate is $11.11 (5 pieces x $100/45 hours). The employee must be paid an additional $27.78 in overtime. ($11.11 x 0.5 x 5 hours). The employee’s total earnings are $527.78 ($500 lump sum + $27.78 overtime).
Q. I have a nonexempt employee who telecommutes, but occasionally drives into the office. Do I need to pay her for her travel time?
A. It depends. Normal commuting travel time is non‑compensable (regular employees aren’t paid for it). Employees who travel from job site to job site, however, must be compensated for travel time. If the employee drives to or from the office during the hours he or she regularly works at home, the employee should be paid for this time. However, if the employee drives to or from the office after hours, this may be considered non‑compensable commuting time. See page 80, Travel time.
Q. We suspect a telecommuting employee has been exaggerating his hours worked on his time reports. Can we deduct a certain amount of hours from his pay?
A. Technically, yes, if you’re correct since an employee is only entitled to compensation for hours actually worked. However, such an approach invites litigation if the employee disagrees with the deduction or the employer cannot prove the falsification. A better method would be to pay the time reported, then discipline the employee for not following proper procedures. This task becomes much easier when an employer has a clear policy requiring employees to report time accurately.
Q. Are additional records required for industrial homeworkers?
A. Yes. The employer must maintain records, by “lot” of work showing the specifics related to that lot. See Homeworkers under the FLSA on page 114.
This blog is an excerpt from our book Wages and Hours – An Employer's Guide by Jill Kirila, Meghan Hill and Shennan Harris at Squire Patton Boggs.