By Heather Sager, Brittany Sachs, Jill Ripke, Lauren Kulpa, Matthew Goldberg

In response to the COVID-19 pandemic, the U.S. Department of Labor (DOL) issued a Field Assistance Bulletin No. 2020-5 (Bulletin) in late August 2020 that addressed the subject of an employer’s obligation under the Fair Labor Standards Act (FLSA) to exercise reasonable diligence in tracking the hours of work for non-exempt employees working remotely. The Bulletin recognizes the need under the FLSA for employers to pay employees for all hours worked, including work performed at home. But it also recognizes that when non-exempt employees work remotely at locations not controlled by the employer that it may be difficult to define what an employer actually knows with regard to the time worked.

The Bulletin starts with the fundamental principle that the FLSA requires that employers must compensate employees for hours worked where the employer has actual knowledge or constructive knowledge of the work. This means that “[e]mployers must, as a result, pay for all work they know about, even if they did not ask for the work, even if they did not want the work done, and even if they had a rule against doing the work.”

Under the FLSA, employers must compensate non-exempt employees who are working remotely if the employer has actual knowledge of the employees’ regularly scheduled hours; they may also have actual knowledge of hours worked through employee reports or other notifications. Essentially, the standard is “whether the employer has reason to believe work is being performed.” (emphasis added). The Bulletin notes that employers must “exercise reasonable diligence” to ensure that non-exempt employees are paid for all time worked. An employer may do so by establishing a system that requires non-exempt employees to accurately record and report all time worked each day. If a non-exempt employee fails to report unscheduled hours, the Bulletin states that the “employer is generally not required to investigate further to uncover unreported hours.” Employers are not required to undertake impractical efforts to sort through non-payroll records of employees’ activity to compare to the timekeeping records. Finally, the Bulletin provides that “failure to compensate an employee for unreported hours that the employer did not know about, nor had reason to believe was being performed, does not violate the FLSA.”

Employers with questions about compensating remote working non-exempt employees, consult experienced counsel.