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Remote Work: FLSA Wage and Hour Implications

 

Since 2005, remote work has soared 173%, according to 2018 data from American Community Service. Whether you recently adopted this remote work model because of the pandemic or have been utilizing it for years, you should know your wage-and-hour responsibilities.

FLSA Rules for Remote Nonexempt Employees

Nonexempt means the employee is not exempt from overtime pay rules under the FLSA. You must pay remote nonexempt employees, whether hourly or salaried, no less than the federal minimum wage, which is currently $7.25. (Many states impose a higher minimum wage.) These employees must also receive overtime pay at 1.5 times their regular rate of pay for hours worked above 40 in a workweek.

The FLSA does not require you to provide short breaks, but if you choose to give them, the time must be paid. Meal periods are unpaid. The FLSA also mandates that you keep records of wages and hours for each remote nonexempt employee.

Challenges: It can be difficult to track hours and breaks for remote nonexempt employees because they're working from home or elsewhere off-site. Depending on the type of work the employees do, you might not always know when they're working. This can result in employees working overtime without your consent.

Solutions: Courts have ruled that remote nonexempt employees are responsible for tracking their own work hours, but their employer must give them the tools needed to track their time. For best results, adopt a timekeeping system, such as an online time clock, that simplifies tracking of remote employees' work time. Also, develop policies regarding work hours, rest breaks, meals and overtime. Communicate the policies in writing to your remote team. Make sure each employee knows his or her work schedule, your expectations and the consequences of violating the policies.

FLSA Rules for Remote Exempt Employees

Employees who are excluded from the FLSA's overtime pay provisions are "exempt," meaning they do not need to be paid overtime for hours worked above 40 in a workweek (or other state-mandated rules). If you have remote exempt employees who are salaried, you must pay them their full salary for any week in which they do any work. Under the FLSA, exempt-salaried employees must receive no less than $684 per week, unless an allowable deduction applies.

You don't have to track work hours for your exempt-salaried remote team because they're paid based on a predetermined, fixed amount. But you can require that they work a certain number of hours per week. If you don't track your remote exempt employees' work hours, you should at least have some type of system for monitoring their day-to-day performance.

Other FLSA Implications

These include travel and on-call time for telecommuters. In both of these situations, determining how to pay telecommuters can be tricky, so seek expert advice as needed.

 

 
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Coulter & Justus, P.C.
Coulter & Justus, PC
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9717 Cogdill Rd, Suite 201
Knoxville, TN 37932
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
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