March 03, 2021 Feature

Wage and Hour Compliance in the Wake of COVID-19

By Adam D. Fuller
Alex Liew/E+ / via Getty Images

Alex Liew/E+ / via Getty Images

Wage and hour compliance has been thrust into the limelight with the COVID-19 pandemic, making it important for employers to be vigilant about maintaining overtime exemptions and tracking employee’s time.

Wage and hour rules and compliance has been thrust into the limelight with the COVID-19 pandemic. With salary and duties being reduced and nearly half of the U.S. workforce working from home, it is important to be vigilant about maintaining your overtime exemptions and tracking employee’s time. Mistakes can lead to costly individual and class wage and hour claims.

Maintaining Overtime Exemptions

To be exempt from overtime requirements, employees must be paid at least $684 per week ($35,568 per year) on a salary basis. A “salary basis” means an employee receives a regular, predetermined amount of compensation each pay period that cannot be reduced because of variations in the quality or quantity of the employee’s work.

Employers who have reduced the salaries of exempt employees should audit their payrolls to confirm those salary reductions have not caused these employees’ pay to drop below the minimum salary threshold in any given week. This is especially important for low salaried exempt employees who may have continued to work more than 40 hours a week on a reduced salary.

Employers who have implemented partial or mid-week furloughs should audit their payroll records to confirm that exempt employees have been paid their full salary for weeks where there was a partial or mid-week furlough. Exempt employees are entitled to their full week’s salary if they work any amount in a week. Thus, exemptions may be lost if exempt employees were not paid their full, predetermined salary as a result of a partial or mid-week furlough.

Employees must also have certain higher-level job duties and perform these job duties the majority of the time to qualify for the exemption. Due to the prevalence of layoffs and furloughs to an employer’s hourly workforce, salaried, exempt employees have been taking on more and more non-exempt, lower-level duties. Employers must be careful with how these non-exempt job duties are managed and distributed. Overloading an exempt employee with non-exempt duties could lead to a loss of the exemption and overtime liability.

Although the U.S. Department of Labor has issued guidance allowing exempt employees to temporarily perform non-exempt duties during the pandemic without loss of the exemption, employers would be wise to rotate such duties between exempt staff. This will hedge against assertions that temporary duties became permanent due to the amount of time they were solely performed by an exempt employee.

As an employer, if you find that any of these rules have been violated, it is important to correct the violation as quickly as possible. This should include properly compensating the employee(s) to remedy the past error. To protect against repetitive errors, employers also need to correct any procedure, protocol, or software errors that led to the wage and hour violation and train any personnel contributing to the violation.

Tracking Time

Tracking work time for non-exempt employees (or employees who could become non-exempt) is critically important as more employees telework and personal duties intrude and intertwine with job duties.

While working from home, a traditional 8 to 5 work schedule with an hour lunch break may not be feasible. Managers should work with their employees to develop a schedule that maximizes productivity and minimizes off-the-clock work. Such schedules may eliminate lunch hours or stagger work time around family obligations.

Regardless of the schedule, the schedule should be clearly documented so that potential off-the-clock work—such as emails sent during established non-work periods—can be identified and corrected. Establishing these schedules will also help managers avoid sending requests for work to an employee during that employee’s off-hours—effectively soliciting off-the-clock work.

Employers should also make sure they have a clearly communicated policy that prohibits off-the-clock work without supervisor approval and consistently discipline for unapproved off-the-clock work.

Although you do not need to use any particular method of tracking your employee’s time, you do need to establish procedures for employees to accurately record and report their time while working from home, train employees and managers on those procedures, be diligent about monitoring compliance, and issuing corrective or disciplinary action for non-compliance.

The Future

Remote work is here to stay. A survey conducted by PricewaterhouseCoopers indicates that 72 percent of workers surveyed would like to work remotely at least two days a week post-pandemic and 32 percent would prefer never to set foot in an office again. While the extinction of the office is unlikely, most employers believe that the majority of their office workers will be permitted to work at least one day a week from home post-pandemic.

This new way of working presents its challenges so now is the time to get policies and procedures in place and determine what works and what does not. Now is not the time for employers to make like an ostrich and stick their heads in the sand, waiting for the pandemic to pass. The pandemic will pass, but remote work (and the wage and hour pitfalls that go with it) are here to stay.

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By Adam D. Fuller

Adam D. Fuller is a Partner at Brennan, Manna & Diamond, LLC in Akron, Ohio, defending employers in employment and business disputes. Mr. Fuller is the Chair of the Employment and Labor Law Committee of the Tort Trial & Insurance Practice Section. He can be reached at adfuller@bmdllc.com.