Avoid ‘Off-the-Clock’ Lawsuits

Smartphones raise new overtime issues for employers.

November 1, 2011

How many of your employees use smartphones to check work-related voicemail or e-mail messages during the weekend? Must nonexempt staff report all such time worked?

As smartphones, laptops, tablets and other personal electronic devices become increasingly commonplace, employers have an increased cause for concern over accurate employee timekeeping and monitoring of overtime.

The Fair Labor Standards Act (FLSA) requires employers to pay nonexempt employees time and a half for hours worked beyond a 40-hour workweek. (“Exempt” employees are salaried and meet certain tests regarding their job duties.)

Under FLSA and similar state laws, failure to pay wages and overtime when due can result in hefty penalties. Wage-and-hour class-action suits involving uncompensated employee time spent responding to work-related e-mails, texts, and phone calls have sprouted in courts around the country.

In March 2011, a federal court denied the City of Chicago’s motion to dismiss a complaint brought by a non-exempt police sergeant on behalf of himself and a class of similarly situated department members. The plaintiff alleged that the city violated FLSA by failing to compensate employees for time spent responding to communica-tions received on city-issued smartphones during off-duty time (Allen v. City of Chicago, No. 10-CV-03183, 2011 U.S. Dist. LEXIS 27137 [N.D. Ill. Mar. 15, 2011]).

Similar class-action suits have been filed in federal courts in New York and Wisconsin.

Given the potential employer liability for uncompensated work time arising from nonexempt employees’ remote access to work communications, credit unions should consider several questions to decrease the likelihood of wage-and-hour claims:

  • Do your nonexempt employees need remote access? Consider issuing smartphones only to exempt employees and nonexempt employees with a genuine, work-related need for 24/7 access to work communications.

Increasing nonexempt employees’ access to smartphones will increase the potential for overtime claims. How-ever, as smartphones become more affordable, employees are likely to purchase their own.

Consequently, it’s important to implement timekeeping and electronic device policies for all employees.

  • Do you have comprehensive policies addressing nonexempt employees’ use of smartphones and other remote access? Technology evolves quickly, and employers’ policies must stay up to date to address nonexempt employees’ increasing access to work communications.

Your workplace policy must require employees’ accurate timekeeping. Is advance written approval from managers needed before employees can work from home? Does your policy explicitly include reading messages from a smartphone?

A timekeeping policy should explain to employees that it’s their responsibility to report all time worked and that failure to do so subjects them to discipline.

  • Do you educate staff on what counts as compensable time and ensure that managers follow up with nonex-empt employees on all time worked outside the office?

Make sure managers and employees understand what is compensable time and how to track it. Remember, even unauthorized overtime work must be compensated.

If employees are expected to respond to work e-mails or customer calls when on a break or after hours, then they may be considered on call or not on a break. If nonexempt employees participate in work-related conference calls from home, that is compensable time.

Recording hours worked outside the office may be challenging for employees, especially when time spent e-mailing accrues in five- or 10-minute intervals.
In May 2011, the U.S. Department of Labor introduced a free application for the iPhone and iPod Touch that helps employees track hours worked, breaks, and overtime, and in calculating wages owed.

While such a tool helps track staff’s remote work time, the timekeeping record it creates—and its potential persuasiveness in a wage-and-hour lawsuit—highlights employers’ need to ensure their payroll records accurately reflect all time worked—whether employees are in the office or on the beach connecting via iPhone.

TRISH WALSH is an associate at Farleigh Wada Witt, Portland, Ore.