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July 28 — Employees who work on flexible schedules, respond to e-mails or make phone calls after regular working hours may soon become eligible for overtime pay under a new Department of Labor regulation, and attorneys and consultants say employers must be ready to meet the compliance challenge.
Until now, countless numbers of such workers were deemed “exempt” from overtime (i.e., ineligible to receive it) because they earned more than $23,660 and did not meet other standards. But the salary threshold below which workers are automatically eligible for overtime pay is being more than doubled, to $47,476, effective Dec. 1, so many employees who work outside the office will become “nonexempt”—in other words, eligible for overtime.
“Those folks who up to this point have been considered exempt, and maintain irregular hours and come and go as they please” will in many cases have to be paid overtime starting Dec. 1, Bob Kilroy, a partner in Worcester, Mass.-based management-side law firm Mirick O’Connell, told Bloomberg BNA July 28.
“The burden is now on the employer” to show why such an employee isn't owed overtime pay, especially if she can produce a logbook showing she worked more than 40 hours a week, said Kilroy, who chairs the law firm's labor, employment and employee benefits group. “If the employer is not used to tracking [working hours] because the employee was exempt, it could find itself behind the curve.”
“There's been a lot of debate,” with some saying the new regulation is “going to kill flexible work arrangements and people sending e-mails after hours, while others say that's way too dramatic,” Manuel Martinez-Herrera, vice president of legal and compliance at New York City-based HR technology company, Namely, told Bloomberg BNA July 27. “I fall somewhere in the middle—it shouldn't be such a big deal if companies have good policies and time and attendance” systems.
For after-hours e-mailers, there is a “de minimis” standard under the FLSA wherein if an employee is just reading an e-mail for a minute and not responding, for example, he doesn't have to be paid for that time, Kilroy said. “But if it's more than a few minutes of time,” with the employee making lengthy phone calls, for instance, “you do have to start tracking that.” In such circumstances, the “record-keeping aspects” become important, he said.
The consequences of getting it wrong can be serious for employers; in Massachusetts, for example, they can be liable for “treble damages” for unpaid overtime, Kilroy said.
In Martinez-Herrera's opinion, there are “not that many people” who were exempt employees and have a company-provided smartphone so they can work outside the office, who now will have to be reclassified as nonexempt. The flexible-work issue affects more people, he said.
In any case, it's essential “to have strong policies” on when employees may work overtime hours, to maintain a good time and attendance system (preferably online, especially for those working from home), and to carefully train employees who were exempt before, on how to track their hours, he said.
In practice, some of the informal arrangements between employers and employees may still be unclear. “I work in a tech company where we try not to track [time] too much,” Mai Ton, vice president of HR at San Francisco-based identity and access management solution provider OneLogin, told Bloomberg BNA July 27.
“There are a lot of blurred lines between people's work and personal lives,” and with many employees having smartphones, there are a lot of late-night work phone calls, she said. “People are not expecting to be compensated for that—they see it as part of the job and take pride in their work. From a compliance standpoint, we pay them well because we don't want them to worry about it, especially in tech companies with offices and clients in different time zones.”
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