BlackBuried: The Hidden Danger of Overtime Pay Liability

Cell phones, laptops, BlackBerrys and other wireless devices have altered how and when employees work. While the devices often increase productivity, they also generate unexpected liability for employers.

The most significant potential liability stems from non-exempt employees utilizing technology to conduct work outside of their normal working hours. Under the provisions of the federal Fair Labor Standards Act (FLSA) non-exempt employees must be paid overtime when they work more than 40 hours during a week.

As an example, a non-exempt employee who works a standard 40-hour workweek and also spends three hours outside the standard workweek reading and reply to the work emails on his or her laptop, home computer or BlackBerry has worked 43 hours and is not entitled to be paid for the additional three hours but is entitled to be paid at an overtime rate. The fact that the employee may have worked the additional three hours entirely on his or her own initiative does not change the result. Under the FLSA rules, “work” is not limited to work done at the request of the employer. It also includes work “suffered or permitted” by the employer.

There are three simple steps employers can take that will reduce potential liability. First, periodically audit job classifications to ensure employees are correctly classified as exempt or non-exempt. Keep in mind that a particular job title and/or being paid a salary does not guarantee an employee is exempt. FLSA regulations require evaluating the employee’s actual job duties. (Even aside from the novel technology-driven concerns addressed in this article, periodic job evaluation audits are a prudent measure to ensure FLSA compliance and limit potential wage and hour liability.)

Second, do not provide cell phones, laptops or wireless devices like the BlackBerry to non-exempt employees. Whether expressly encouraged by the employer or not, employees are inevitably going to use such devices to work outside of their normal workweek. Such devices typically also create a reliable record of when and how long the employee used them providing powerful evidence for employees who make claims for unpaid overtime.

Third, implement a policy telling non-exempt employees not to work “off the clock” or outside their normal workweek unless directed to do so by a supervisor. In organizations where some emergency “off the clock” work is unavoidable, employers should at least implement a policy that requires non-exempt employees to record and report such work as soon as possible. Such policies reduce the likelihood of employees claiming that the organization tacitly approved of or encouraged them to work on their own cell phones, laptops, BlackBerrys or other wireless device but then failed to pay them for their time when they did so.

New technology has enabled employees to connect to the office and to work at all hours of the day and from all corners of the globe. The benefit of such technology for employers is obvious. The danger is often less obvious. A key danger of employees’ use of BlackBerrys and other wireless devices is exposure to overtime claims. Fortunately, taking time to understand the FLSA rules and to reevaluate an organization’s overtime policies can greatly reduce otherwise unforeseen liability.

This article is intended for general informational purposes only, and should not be construed as legal advice. Always contact your legal counsel for advice or answers to your questions.