Working Off the Clock? Here’s Why It Is Illegal
Do you know the one thing that can get your employees angry and bitter? Well, that is assigning them work off the clock and not paying for overtime. This is when overtime work becomes abusive for them. As an employer, manager, or supervisor, understanding the wage and hour law is crucial. Doing so is important if you want to avoid putting your company at risk of state and federal law violations.
With today’s technology, it is easy for employees to work anytime, anywhere.
The problem is, compliance might be challenging, especially when employees don’t stick to their schedules. An employee might stay late or report early to work thinking that they are doing their boss a favor. On the contrary, when employees work off the clock, they pose legal issues for the employer.
Before the new overtime regulations took effect in January 2020, some small businesses didn't have to worry about non-exempt employees. However, under the new rule, an additional 1.3 million workers are now eligible for overtime protection.
So, you might ask, “Can my employer get in trouble for me not clocking in?” The short answer is “Yes”. The Fair Labor Standards Act (FLSA), has a set of rules governing the working conditions of employees. For instance, the FLSA defines the minimum standards of state wage and hour laws that you should get paid for. It also dictates that an employee should be paid for any work they do, regardless of time and place. In other words, an employer should pay for every hour that you are entitled to as a worker.
In our post today, we discuss several pertinent issues that affect hourly employees working off the clock and the ramifications of encouraging off-the-clock work.
The Fair Labor Standards Act has established the minimum wage and overtime (among other employee protection) regulations to protect the right of employees. Under the FLSA, all non-exempt workers are entitled to all the hours worked, including overtime. Non-exempt employees are required to account for all hours worked either using a timecard or time tracking system.
As of January 1, 2020, hourly and salaried employees who earn less than $684 per week ($35,568 per annum) qualify for overtime pay if they work more than 40 hours per week. This is a $229 increase from the previous salary threshold of $455 per week.
Non-exempt employees are workers who are entitled to all FLSA provisions, including the federal minimum wage and payment of overtime. Employees who fall in this category are salaried workers who work in supervisory, professional, and executive positions. By salaried, we mean workers are paid a guaranteed minimum wage per week instead of salary based on the number of hours worked.
Overtime pay is calculated as one-and-a-half times their hourly rate, for every hour worked, beyond the standard 40-hour workweek. Exempt employees become entitled to overtime pay when they are reclassified as non-exempt employees.
What Does Working Off the Clock Mean?
Off-the-clock work is work that an employee does for an employer without pay or work that doesn’t count as overtime. The employer might or might not have knowledge that his employees are working overtime. Either way, the employees should be compensated for the extra hours worked.
If workers hit the 40-hour working limit on Thursday, technically, they are legally not required to work on Friday. Otherwise, you have to pay them overtime.
Under FLSA, if an employer requires an employee to work, the worker’s time should be compensated. Even if an employee works for a few minutes before or after clocking in, that time is billable, unless it's extremely short—like 30 seconds.
Types of Off-the-Clock Work
Off-the-clock work can take many forms. The most common ones include:
- Employees reporting early to work to finish pending projects from the previous day. This could be caused by pressure from management. In order to keep their job, the worker puts in extra time to get the job done.
- Staying late to finish a project is another reason employees work off the clock. They use this time to finish work that ‘should have been completed within the shift’ (at least according to the manager). Other employees take advantage of this time to get ahead of their colleagues to appear more efficient. However, overworking employees may suffer from burnout, which will eventually affect their overall performance.
- Attending to administrative tasks like employee training, meeting with the management, or finishing up on paperwork on an employee's own time.
- Preparing for work like reading emails and/or bulletin boards, loading up trucks, or setting up a restaurant. Preparing work for the next day after the shift is over also counts as off-the-clock work. An example would be working until 10.30 at night to prepare for the next day’s presentation.
- When an employer asks an employee to redo a project or correct errors without pay, that is considered off-the-clock work.
- Performing any kind of work through lunch breaks is also a violation of the FLSA employee working condition, unless that time is included in overtime.
Is It Illegal to Work Off the Clock?
Let’s say an employer has knowledge that an employee is working off the clock yet he doesn't compensate for the hours worked. He risks attracting investigations from the Department of Labor (DOL) or state agency investigations and audits.
The employer must not encourage off-the-clock work. As an employee, you have the right to sue your employer for unpaid wages as stipulated under the FLSA. For example, an employer may ask an employee to clean up the office after clocking out. Aside from being illegal, this also kills the morale of the worker. If the employee gets injured while working off the clock, the employer may be liable to cover the former’s medical expenses.
In case an employee files a lawsuit, the company will have to pay not only the legal fees but also a settlement fee. In most cases, they’d end up shelling out more than if they had paid the employee for working overtime in the first place.
Additionally, an employee can recover unpaid wages or unpaid overtime dating back three years. Generally, encouraging off-the-clock work can be a costly mistake on the part of the employer. If an employer has a tendency of not paying overtime, they may face a class action under state wage and hour laws.
According to the FLSA rules, an employer is required to pay employees for all work done, suffered, or permitted. In other words, whether or not the employer requested the employee to work off the clock, the company must still pay the employee if work was done, and the time must be counted as part of overtime. Even if an employee undertakes the job voluntarily, she must log the hours worked. Failure to do so could get the employer in a lot of trouble with the law.
How to Prevent Off-the-Clock Work
As noted earlier, the penalties for employers who fail to pay workers for off-the-clock work are usually steep. That answers the question,“Can an employer have you work off the clock?” Normally, an employee will be happy to work that extra shift to earn more or in exchange for positive recognition from the management or better performance appraisal. However, if an employee is terminated suddenly or they become unhappy at work, lawsuits start trickling in.
To prevent such occurrences, employers should:
- Formulate awork policy that explains when employees can work overtime and/or off the clock. Employers should provide examples of what it means to work off-the-clock.
- Prevent supervisors and managers from emailing or texting non-exempt workers after they clock out.
- Find ways to keep hourly employees from working off the clock or from accessing their corporate email accounts remotely.
- Discourage employees from taking lunch from their workstations. If an employee is allowed to take lunch at their assigned work area and the phone rings or they receive a work email, they will feel obliged to answer. They will then be required by law to log the extra time.
- Educate employees, supervisors, and managers about state wage and hour laws. Encourage proper timekeeping and make sure that employees are clocked in for every minute they work. Employers should ensure that employees don’t stay late to finish assignments or projects or report to the office early to complete pending projects.
- Implement the use of employee monitoring software to ensure that every minute worked is logged, not only to avoid legal issues but also for accurate billing.
Technology and Off-the-Clock Work
Thanks to technology, telecommuting and remote working have become the norm for most companies. Employees can now work from anywhere, on any device, as long as there is an Internet connection. While this is a good thing for both employers and employees, it has a downside – it increases the chances of employees working off the clock.
Even as technology opens up opportunities to tap into diverse talent, employers must be vigilant to ensure that off-the-clock work is prohibited after signing out. On the flip side, employers can take advantage of time tracking software to record all the hours worked to make sure that the employee is fully compensated.
Keep Payroll Records Accurate
Working off the clock not only attracts hefty penalties but may also lead to inaccurate payment processing. If the hours are not recorded, it will be impossible to calculatethe billable hours precisely. This could cost the company lots of money in the long run, especially if the employee decides to sue the company.
To mitigate such costly risks, it is highly recommended to track employee time and capture the hours worked. Traqq not only helps you to monitor employees’ performance and productivity but also makes the entire process easier by automating payroll processing. The detailed reports and time sheets record the working hours of each employee, making sure that you pay them what they are owed.
Take major steps today to minimize work off the clock and create a favorable working condition for all workers. When employees are satisfied, turnover is low and productivity is high.