United States: Employers Who Permit After-Hours Work Should Exercise Caution In Light Of An Anticipated Increase In Nonexempt Workers

Following the directive issued in March 2014 by President Obama, the U.S. Department of Labor published a proposed new rule in the Federal Register and is accepting comments through September 4, 2015. The new rule would extend overtime protections to nearly five million workers by raising the minimum salary threshold to $50,440 per year for employees to qualify for "white collar" exemptions in 2016, with automatic future adjustments. According to a 2013 report published by the Economic Policy Institute, in 2013 only 11 percent of salaried employees in the United States qualified for overtime pay. If enacted, the Department of Labor's proposed changes would raise the overtime salary ceiling for qualified employees to sweep millions of Americans into the overtime system.

In the United States, the Fair Labor Standards Act (FLSA) establishes overtime pay standards whereby covered workers must generally be paid at least 1.5 times their regular pay rate for each hour of work per week beyond 40 hours. Salaried workers who earn below $455 per week, or $23,660 per year, are automatically eligible for overtime pay – regardless of the nature of their job or the duties they perform. Salaried workers who earn $455 per week or more can be exempted from the right to receive overtime if they fall into one of three categories: professionals, administrators or executives, referred to as the "white collar" exemptions. These categories are defined by –– among many other things –– job duties requiring the employee to exercise discretion and independent judgment in their work on matters of importance to the business, or a manager with a department and employees to supervise.

THE IMPACT OF TECHNOLOGY ON COMPENSATION AND LITIGATION UNDER THE PROPOSED RULE

While the U.S. Department of Labor is proposing a new rule to expand the number of employees who may receive overtime law protection, claimants' attorneys are focusing on employers who permit or encourage their employees to use smartphones to conduct business off the clock as potential defendants in claims for overtime pay. If both possibilities become a reality, more claims for overtime pay are likely to be seen in the future.

When the proposed rule is finalized, employers with an increase in nonexempt employees who are performing important business functions should consider the increasing complications in properly compensating these new hourly paid workers who use remote access and smartphones in the course of their employment. For example, a recent college graduate currently making $30,000 per year as a junior analyst and working 60 hours a week may not be qualified to receive overtime pay simply because her employer classifies her as a "professional" who is currently exempt from overtime regulations. If the overtime ceiling for salaried employees is raised to $50,440, that employee would be automatically eligible for overtime pay, regardless of the nature of her job.

In the United States, FLSA cases have spiked in the past 10 years, with a total of 8,126 cases filed during the 12-month period preceding March 31, 2014. This trend is expected to continue, especially when the Department of Labor's proposed rule to expand FLSA overtime protections is finalized. While remote access and smartphones may increase productivity in the workplace, there is often an implicit expectation that employees will be available during their off hours to respond to emails.

As a result, company-issued smartphones and similar technology often cause an employee's work to spill over into off hours. This may result in more suits similar to the one filed by salespeople at T-Mobile USA Inc. stores in 2009. The class-action lawsuit asserted claims for overtime wages, alleging that sales workers were required to review and respond to numerous "e-mails and text messages at all hours of the day and night." According to the complaint, the sales workers alleged that T-Mobile failed to pay them for the 10 to 15 extra hours a week they spent performing these off-the- clock duties. T-Mobile settled the suit in 2010 for an undisclosed amount.

In another FLSA suit, a district court judge granted class certification in 2013 for certain individuals employed by the City of Chicago Bureau of Organized Crime (BOC) related to their FLSA claims against the City of Chicago. The named plaintiff alleges that the police department issued Blackberrys to members of the BOC. He alleges that there was an unwritten policy that BOC employees were expected to use these Blackberrys and "be on-call twenty-four (24) hours, seven (7) days a week so that they could access work related e-mails, voicemails, and text message work orders regardless of their location." The plaintiff further alleges that time spent receiving and responding to these communications was not compensated – including overtime compensation – under the FLSA. Indeed, the employees within the BOC "felt obligated to respond to these e-mail communications and telephone calls while off duty ... [and that] a culture had developed where police officers feel compelled to work for free in order to possibly gain a promotion and/ or maintain their coveted assignment in a specialized unit." The City of Chicago denies that the plaintiffs are entitled to additional overtime compensation under the FLSA and contends that the plaintiffs cannot show that they performed compensable work for which the City had notice and/or that they were performing said work without being compensated. The City further denies the existence of unwritten policies by which plaintiffs were required to perform compensable work on their Blackberrys while off duty without compensation.

According to the proposed pretrial order in this case, the only issue to be determined at trial is whether the Chicago Police Department "maintained an unwritten policy that [p]laintiffs would not be paid for compensable overtime work performed outside of normal work hours on their Blackberrys [sic]." Legal precedent is lacking in this area, as these cases often settle out of court due to the expense of protracted litigation. Notably, the Jeffrey Allen v. City of Chicago suit proceeded to a bench trial, with the presentation of evidence and argument concluding on August 24, 2015. The forthcoming decision will be particularly instructive with regard to how employers should handle expectations of smartphone use during off-work hours.

TAKEAWAYS

The FLSA states that qualified employees must be compensated for overtime when an employer "suffered or permitted" the employee to do such work. Provided that an employer knows or should have known that work is being done and permits the employees to do so, such work must be counted toward overtime. If an employer does not wish for an employee to perform work after hours, it must specifically prohibit the employee from doing so if it does not wish to include that time in the required FLSA pay computations.

In the digital age of phone records and time-stamped emails, an employer has little difficulty knowing whether an employee is working during off hours.

Thus, even if an employer does not require employees to respond to emails or phone calls off hours, the company can still be liable so long as a manager is aware that an employee is doing such work off hours. Companies must be mindful of nonexempt employees who use smartphones to send and receive work-related emails to avoid suits similar to those described above. To protect their interests, companies are advised to specifically prohibit nonexempt employees from after-hours work and take measures to enforce those rules, or cease issuing their employees smartphones and enabling remote computer access. Companies should also review their time-keeping policies and after-hours communications policies imposed on nonexempt employees to ensure compliance. However, if nonexempt employees truly need to be working after hours responding to emails, then a mechanism needs to be implemented to ensure accurate reporting of time spent and proper compensation for the hours worked.

The employment law specialists at Wilson Elser are available to assist businesses in understanding and complying with the rapidly changing workplace laws.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions