If you’re a manager or business owner who employs non-exempt workers, you know that calculating hours worked can be a complicated subject. Under the federal Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least the minimum wage for all hours worked, and overtime at a rate of not less than time-and-a-half the employee's regular rate of pay for any hours worked beyond 40 in a given workweek. (Note that wages may also be regulated by state law. When both the FLSA and a state law apply, the law setting the higher standards must be observed.)
Employers who fail to pay non-exempt employees for all hours worked put themselves at risk of an employee complaint and a formal Department of Labor investigation. These investigations are becoming far more common. And they often widen in scope from the initial complainant to encompass all similarly situated employees at a given company, resulting in mounting fines, penalties and legal fees.
One of the most common mistakes employers make is not understanding which activities performed by their employees count as work time. Let’s take a look at a few situations as outlined by the U.S. Department of Labor:
Waiting Time: In some circumstances, waiting time must be paid and is counted toward hours worked subject to overtime. The distinctions here are fine, but important. Under the FLSA, if an employee is waiting to be engaged, that is, waiting to start work, then the wage clock is not yet ticking. However, if the employee has been “engaged to wait,” the clock is in fact running. Examples of this would be an executive assistant reading a book while waiting for dictation or a firefighter playing cards waiting for an alarm.
On-Call Time: Similarly, an employee who is required to remain on call on the employer's premises is working while "on call." If the employee can remain on call at home or leave word where he or she can be reached, this time typically will not count as hours worked. However, if the employee’s freedom is constrained by being on call, this time may need to be compensated.
Rest/Meal Periods: Rest and meal periods can be another area of confusion. Rest breaks must be counted as hours worked for purposes of minimum wage and overtime requirements under federal law. These breaks include short periods (usually 20 minutes or fewer) that employees are allowed to spend away from the work site for any reason—for example, smoke breaks, restroom breaks, and breaks to make personal phone calls or to get coffee or soft drinks.
Bona fide meal periods (typically at least 30 minutes) are generally not considered work time under federal law, so long as the employee is completely relieved from duty during the meal period. An employee is not completely relieved from duty if he or she is required to perform any duties or do any work (active or inactive) while eating.
Keep in mind that many states require that employers provide meal periods and rest breaks (either paid or unpaid), and some even specify a particular time when breaks or meal periods must be given. Remember that where both the FLSA and a state labor law apply, the employee is entitled to the most beneficial provisions of each law.
Travel: Travel time can be tricky when it comes to counting hours. Under the FLSA, ordinary travel to and from work does not count as hours worked. However, time spent traveling to and returning from a special one-day assignment in another city generally does count as hours worked (minus any time the employee would normally spend commuting to the regular work site). Travel that is a regular part of the employee’s job, such as going to different job sites, is also considered compensable work time. Travel that keeps an employee away from home overnight may also count as hours worked, with special rules limiting how much time can be counted outside of regular working hours.
The bottom line is, employers need to carefully monitor all the time employees are engaged in work-related activities in order to correctly calculate hours worked. For more information, visit the official U.S. Department of Labor web site at www.dol.gov, and be sure to check with your state labor department for additional requirements that may apply. Also be sure to visit us online at www.hr360.com for detailed information on this and other aspects of HR and employee benefits management.