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Punching the Clock: Why it is more important than ever that employers evaluate how to track employees’ time worked remotely

On Behalf of | Jun 8, 2021 | Publications & Presentations

Now that more and more people are looking at working remotely at least part-time, it is time for employers to re-examine how they track time, which they are obligated to do under the law. The Fair Labor Standards Act (“FLSA”) sets federal minimum wage, overtime pay, recordkeeping, and youth employment standards for employment subject to its provisions. Unless exempt (workers meeting one of the overtime pay exceptions under the FLSA), covered employees must be paid at least the minimum wage and not less than one and one-half times their regular rates of pay for overtime hours worked.

In Arizona, under the Fair Wages and Healthy Families Act (“FWHFA”), employees are entitled to accrue sick time at a rate of one hour of paid sick time for every 30 hours that they work. Eligible workers are entitled to at least 24 hours of paid sick time if the employer has 14 or fewer workers. The amount increases to 40 hours of paid sick time for employers with 15 or more workers. Of course, it also behooves employers to make sure that they are awarding sick time only for time actually worked.

Importantly, these laws also require the employer to maintain accurate records of employee time worked to comply with these laws. The risks to the employer who fails to maintain accurate time records are great. In addition to violating the law, employers who fail to ensure accurate record-keeping can be putting themselves in a position where they are not able to defend against wage and hour claims. For instance, employees can claim they worked hours for which they were not paid. Employees can also claim that they were not provided the required accrual of sick time. Managing these time accounting issues is even more difficult when more of the workforce is working remotely. When the employee is not reporting to the office every day, it is more difficult to track when they are working and when they are not.

The challenges to employers who do not maintain adequate time records in defending these wage and hour suits are significant. These wage loss lawsuits are difficult to defend, expensive to defend, frequently result in class action litigation, and often come with attorneys’ fees provisions in which the employer must also pay the attorneys’ fees of those attorneys who are successful in their pursuit of these claims on behalf of employees.

Satisfying wage and hour record-keeping requirements can be relatively straightforward in industries where a traditional punch clock is used. However, many industries use more of an honor system in which the employee fills out a weekly timecard and (sometimes) the supervisor also signs off on the timecard. Ensuring accuracy of such records is relatively easy when the supervisor and the employee are both in the same workspace and the employee keeps a regular schedule . . . a standard start time, a standard end time, and standard break times.

In March 2020, millions of workers were forced to work in a remote environment due to the COVID-19 global pandemic. Employers scrambled to address technology and logistical concerns associated with making the labor force “work” in a remote environment. Both employees and employers were challenged by the sudden change in status. Now, more than a year later, many industries are addressing return-to-work issues, including how to ensure the continued safety of the workforce.

Early assessment reveals that employees are either (a) preferring a purely remote work environment or (b) looking for a “hybrid” in which they would continue to be permitted to work remotely (at least part of the time). For example, employees with longer commutes are finding they now have more time with their families and more flexibility to tend to personal matters. [See, e.g., Washington Post, April 29, 2021 – “The pandemic gave parents the chance to work from home. Now they don’t want to give it up.”] Some employees are finding the remote work environment to be less distracting, indicating that they are more focused and, thus, more productive when working remotely. Of course, others have indicated that the distractions at home are greater and, thus, they prefer to work in the office.

Employees are not the only ones to see the benefits of a remote work environment. Employers are considering the overhead cost savings associated with having a partially remote workforce, as well as the benefits of having appreciative employees who value working from home. However, employers also need to balance the benefits against the costs of a remote work environment. For example, one consideration is the loss of a “team” environment or the challenges with maintaining the “company culture” they worked so hard to develop. Another factor is the impact on the ability of more senior employees to mentor more junior employees. Finally, managing remote employees is necessarily more challenging. Productivity needs to be closely monitored. Performance needs to be closely monitored. But it can be done with the right policies and procedures.

Regardless of these big picture decisions that need to be made, companies who are considering transitioning to (or maintaining) a remote environment, or even some form of a hybrid environment, need to evaluate their procedures for maintaining accurate and adequate record keeping. Employers who are considering maintaining a remote environment need to assess how they are (a) ensuring the employees are working the hours for which they are being paid and (b) ensuring that the recordkeeping is accurate.

At the beginning of the pandemic, some employers implemented a computer log-in version of a time clock. The software tracks when the employee logs in and out and reports that back to the employer. For a break greater than twenty minutes (breaks of twenty minutes or less are compensable under the FLSA), the employee is required to log out and log back in upon returning from a break. This allows the employer to track time worked. Employers who are considering maintaining a remote work environment are encouraged to explore solutions beyond the traditional “honor system” of keeping time.

Because such time clock software would still allow a remote employee to remain logged in and then, for example, leave to take a child to school, it is also helpful if the employer can monitor the employee to ensure that work is being done. For example, some employers have implemented keylogger or keystroke software. This is a type of surveillance technology used to monitor and record each keystroke typed on a specific computer’s keyboard. The employer would then get reports of employee activity (and, more importantly, significant downtime). While this software helps employers manage employees who are not working as productively in a remote work environment, it also helps employers defend themselves in the event of a wage claim as it supports that the particular claimant may not have actually been working the hours for which they are seeking to be paid.

While there is likely to be pushback by employees who have never been forced to “punch the clock,” both employees and employers should balance that against the benefits of working in a remote environment. In any event, employers should meet the new challenge of having a remote work staff by ensuring protections necessary to maintain adequate and accurate time records as they are required by law to do.