Managing Wage and Hour Compliance During the COVID-19 Pandemic: Part I: The New Remote Workforce

04.14.2020

Employers transitioning from their non–exempt employees working in–office to a remote work force are faced with new challenges regarding compliance with the applicable wage and hour laws. Proactive planning and implementation by employers can help to mitigate potential employee claims and liabilities.

This two–part series addresses employment law compliance challenges employers must navigate during these unprecedented times. This alert, Part I, addresses common wage and hour compliance issues that employers face in a successful transition to a “work–from–home” (“WFH”) workforce, including (A) timekeeping policy compliance, (B) observing meal and rest break requirements, (C) work schedule management, (D) setting and documenting work boundaries, (E) importance of supervisor engagement, (F) business expense reimbursement policies, and (G) maintaining open communication for employee concerns. Forthcoming Part II of this alert will address certain employer considerations relating to workforce size and labor cost management during the economic disruption caused by the COVID-19 pandemic.

Managing the Remote Workforce

A. Timekeeping Policies—Reemphasize, Repeat & Reinforce!

It is easy for employees to become complacent when it comes to recording their time. This creates a potential liability for employers because non–exempt employees must be paid for all hours worked. Regularly remind non–exempt employees, in writing, that timekeeping policies still apply while working remotely, they must record their hours worked accurately and contemporaneously, and they will be paid for all hours worked. Also, employers should document when the reminders were sent, by whom, and identify the recipients.

Having a compliant written policy in place is also critical, and helps ensure non–exempt employees are accurately recording their hours worked. The policy may also be useful in enforcing timekeeping policies through training, refreshers, or disciplinary actions, and in defending actions related to time–keeping policies and practices. Employees should also be required to review and certify that their timecard record for the applicable pay period is accurate and reflects all hours worked—including start and end times for the day and their meal period(s). A verified, detailed timecard is a helpful record for employers to have should an off–the–clock, meal break, or other wage and hour claim be asserted.

B. Meal & Rest Break Requirements

California’s meal and rest break requirements remain in full force even in the WFH setting, including relieving an employee of all work duties while on their meal and rest breaks. Employers should instruct non–exempt hourly employees they must abide by meal and rest period policies even while working from home, including (1) recording the time they begin and end their meal break, (2) meal breaks must be at least 30 minutes in length and uninterrupted, and (3) taken before the end of the fifth hour of the employee’s shift. Employers should ensure that employees are in fact taking compliant meal breaks by regularly reviewing timecards for short, late, and missing meal breaks. If non–compliant meal breaks are found, employers must pay the one–hour meal premium wage, and should immediately counsel the employee regarding taking and recording their meal breaks. Also, keep meal period timing requirements in mind when scheduling “lunch” video meetings or telephone calls.

Even though rest breaks need not be recorded, employers should ensure non–exempt employees are in fact taking a 10–minute uninterrupted rest break for every four (4) hours of work, or major fraction thereof, and are taking their rest breaks as close as practicable to the middle of their work period. Employers should also have a clearly established method for employees to report any meal or rest break that was missed, late, or interrupted/short. The reporting process should also include notifying payroll so the appropriate premium wage can be added to the employee’s pay.

C. Workin’ 9 to 5, what a way to make a living?

Employees who abided by a set schedule while working in the office may also be expected to do so in the WFH context. In the new WFH setup, employers want to avoid an employee claiming that while working from home, they were required to work at all hours or were always on–call. To avoid such claims, managers need to have schedules for non–exempt employees and remind those employees that they are only to work during those scheduled hours.

If employers have both exempt and non–exempt hourly employees, the employer should circulate its non–exempt employees’ WFH schedule among its exempt employees and reiterate to them that the same policies apply as before. A good rule of thumb is if you would not have contacted a non–exempt employee outside the office hours before they worked remotely, do not contact them outside of work hours now that they are working remotely.

Just as in the office, hours worked in excess of eight hours in a workday or 40 hours in a workweek triggers overtime for non–exempt employees. Having employees “return” to work and clocking back in for the day may trigger split–shift, second time in a day reporting time, and associated minimum pay rules.

D. Set Boundaries.

Related to setting a schedule, it is important to set boundaries. Again, employers do not want to find themselves in a predicament where an employee claims they did not receive an uninterrupted meal break because they were contacted during their meal period, or were working off–the–clock because they were contacted after hours. For meal periods, employers should stress to its non–exempt employees that they are not to perform any work under any circumstances, including communicating with their employer, while on their meal period. For after–hours issues, remind employees that just as before, once they clock out for the day, they should no longer be communicating with their employer. And similarly, they should clock–in prior to starting work or communicating with their employer.

This type of exposure commonly comes from exempt employees and/or managers contacting non–exempt employees while the non–exempt employee is off–duty. A quick “respond whenever you can” or “this will only take a minute” text or email to an off–duty employee is the sort of communication that exposes employers to liability. Therefore, employers should emphasize to its exempt employees that they should not contact non–exempt employees before or after working–hours.

To help facilitate these policies, employers should, as previously mentioned, circulate non–exempt hourly employees’ work schedules among its exempt employees to make them aware of when not to contact non–exempt employees (i.e., during their meal period or before/after work hours). Employers need to reinforce this policy, reminding their exempt employees that under Labor Code section 226.7, a premium is owed for short, late, missed, or interrupted meal and rest breaks. In scenarios where non–exempt employees do not have a set meal period and are permitted to take their meal period any time they want before the end of the fifth hour, employers should have non–exempt employees inform their supervisors when they are taking their meal period so the non–exempt employee will not be interrupted.

E. Supervisors are the hall monitors of 2020

Vigilance is key during these uncertain times, especially in the wage & hour context. Employers should conduct refresher training for their supervisors on the company’s timekeeping policies and expectations. Supervisors should then be expected to enforce those policies and expectations among its non–exempt employees. Specifically, supervisors should be on the lookout for any practices by an employee that may be problematic for the employer down the line, and immediately counsel the employee to correct those practices. Examples to watch for include employees sending emails after work–hours, or missing their meal periods—even if only on one occasion. Supervisors should review time cards weekly for compliance, and also be regularly checking in with their staff and reminding them to comply with company policies.

F. Who gets stuck with the bill?

Necessary business expenses are certain to arise in the WFH setup. California requires reimbursement of business expenses irrespective of an employee’s classification or the impact on minimum wage. This is to prevent businesses from passing their operating expenses onto their employees. If an employee incurs business related expenses as a result of WFH—such as having to buy a printer or use their personal telephone for work related matters, etc.—those expenses may need to be fully or partially reimbursed. The amount of reimbursement for mixed use items such as telephones is not clearly defined under California law, and there are different methods to calculate a reimbursement amount.

Employers should maintain (or establish) expense reimbursement policies and procedures, and make sure all employers are aware of them. This includes explaining the process for an employee to get reimbursed, and any forms needed to be completed, and whether receipts are required for reimbursement.

G. Can we talk?

It is without question that these are difficult times for employees and employers alike. To help alleviate the anxious thoughts and feelings that inevitably come with our “new normal,” employers should invite open communication with its employees about any challenges that WFH presents. Employers should also take strides to quickly resolve any work–related issues that an employee is experiencing, provide reasonable accommodations, and/or assuage their concerns.

Conclusion

The transition to a remote work force means complying with the same Labor Code and Wage Order requirements, but potentially finding new ways to monitor, track, and enforce compliance. Employers should take the time now to review their underlying policies and procedures to make sure they are in compliance, clearly communicate any changes to the underlying policies and procedures as well as how compliance is being enforced for the remote work force, and implement methods of ensuring the policies and procedures are being followed—regardless of how far away or remote their new work location happens to be. Employers should then follow–up to ensure any changes are effective and implemented consistently. The time and effort spent ensuring compliance now will help minimize exposure should wage and hour claims be asserted in the future.

Wage and hour lawsuits continue to be one of most frequently filed employment–related lawsuits. While the claims often appear to be technical in nature and of small value, the statutory and civil penalty scheme in California results in a pyramiding of damages and potential exposure. Additionally, these claims are often filed as class, collective, or representative actions—meaning one employee will sue on behalf of all other employees—again, greatly increasing the risk and potential exposure to the company. These class action lawsuits, unfortunately, can quickly become “bet the company” litigation unless proactive compliance and risk management tools are implemented. While the importance of compliance cannot be understated, risk management tools including arbitration agreements with enforceable class or collective action waivers remain an effective tool for California employers.

Please contact your usual trusted counsel at AALRR or the authors if you have any questions about wage and hour compliance, or implementing or updating your arbitration agreements.

Stay tuned for Part II of this alert which will be published tomorrow and will focus on issues facing employers evaluating options for managing its workforce size and labor costs.