Conducting business in the U.S. Virgin Islands poses unique challenges not often encountered in the states, but also unique opportunities. This 20-part series offers tips for doing business in the U.S. Virgin Islands, covering a broad array of topics affecting employers. Part 10 of this series addresses the laws relevant to tracking hours worked and compensating hourly employees for regular and overtime hours.

Tip 10: Tracking Hours Worked and Compensating Employees for Regular and Overtime Work 

One area in which employment law in the U.S. Virgin Islands diverges from federal law concerns the circumstances that give rise to an obligation to pay overtime (calculated at one-and-one-half times the regular rate of pay) to nonexempt employees. In addition to earning overtime for any time worked over 40 hours in a week, nonexempt employees also are entitled to receive overtime for any time over 8 hours in one day or for any time worked on the sixth or seventh consecutive day in a workweek. Employers in the tourist service or restaurant industry are required to pay overtime using these guidelines, except that overtime is not earned on a sixth consecutive day by an employee if he or she has exceeded 40 hours in the workweek during which any part of the sixth consecutive day is worked.

Calculating Overtime

Overtime must be calculated using the method that results in the greatest compensation for the employee. By way of example, suppose an employee works as follows during a workweek:

Although this individual worked a total of 40 hours, she or he would be entitled to compensation at one-and-one half times the regular rate of pay for each of the days when the total hours exceeded 8 hours. This would yield overtime pay for two hours during the hypothetical workweek.

Determining Hours Worked

A starting point for calculating overtime is obtaining an accurate record of hours worked. Regardless of whether overtime is due, employers must compensate nonexempt employees for all hours worked. As a practical matter, this means that the employer may want to implement and maintain procedures for nonexempt employees to report all time worked, whether it is pursuant to a schedule established by the employer or outside of any such schedule. Although an employer may implement procedures to discourage employees from working outside of the schedule established by the employer, and an employer may establish policies for disciplining employees who disregard such procedures and violate applicable workplace rules, an employer may not refuse to pay an employee for work that is actually performed or deter or affirmatively prevent employees from accurately recording unscheduled time worked.

In order to facilitate accurate recordkeeping, employers may wish to consider training employees, educating supervisors and managers to whom nonexempt employees report, and implementing other reasonable measures.

Training employees. Employers may wish to review and, if necessary, update policies to ensure that employees are knowledgeable about their obligation to report hours accurately, including on occasions when they perform unscheduled work. Among other measures, employers may consider encouraging or requiring employees to record time worked on a daily basis (rather than at the end of a workweek), and employers may wish to consider discouraging employees from “prepopulating” timesheets at the start of a workweek or at the start of a shift based upon an anticipated schedule. Employers may also consider establishing and publicizing channels for employees to report any concerns about timekeeping instructions or concerns about the adherence of supervisors, managers, or coworkers to timekeeping rules established by their employers. Additionally, when weather-related or other emergencies arise that may require employees to perform unscheduled work, employers may wish to issue reminders about timekeeping policies. Employers also may wish to issue similar reminders in the event of any outages of computer-based systems that are ordinarily utilized to record hours worked or establish clear, alternative protocols for recording hours worked in the event that computer-based systems are inaccessible due to circumstances beyond the employee’s control.

Educating supervisors and managers. Employers also may wish to ensure that supervisors and managers to whom nonexempt employees report receive appropriate education and guidance about the employer’s obligation to compensate employees for hours worked, and that such individuals are appropriately and consistently held accountable for engaging in any conduct that frustrates or impedes compliance with applicable law. A recently issued U.S. Department of Labor (DOL) Field Assistance Bulletin, No. 2020-5, makes clear that employers are obligated to compensate employees if the employer knows or “has reason to believe” that work is being performed but not reported. As a result, employers may wish to implement clear guidelines for supervisors or managers to follow when reviewing time records, including steps that are expected if such records do not capture time that the supervisor or manager knows was spent performing work.

Implementing other reasonable measures. The obligation to compensate employees for work that the employer “should have known” about raises obvious questions about the extent to which employers are obligated to cross-reference or examine other records that might bear upon the accuracy of reported hours. The DOL’s guidance indicates that employers are charged with knowledge that they could acquire “through reasonable diligence,” and it is foreseeable that courts or other decision makers construing the U.S. Virgin Islands’ wage and hour laws would utilize this approach in evaluating compliance with territorial law. Because the extent of information that is available “through reasonable diligence” will vary with the circumstances, employers may wish to conduct a fact-specific analysis of operations that assesses the existence of non-payroll records of employee activity and the practical burdens of examining this information on a regular basis.

Practical Takeaways

Although the laws concerning the obligation to compensate nonexempt employees for hours worked and the laws concerning the calculation of overtime in the U.S. Virgin Islands have not changed recently, many employers have witnessed significant changes in operations due to the impact of COVID-19, including increased reliance on remote working arrangements, which may create additional challenges for monitoring hours actually worked. In addition, employers doing business in the U.S. Virgin Islands may face weather-related operational changes during hurricane season that may also impact work schedules and create additional obstacles for monitoring hours actually worked. As a result, employers may wish to review and adjust policies proactively and educate members of the workforce in order to minimize the likelihood of legal challenges related to the failure to compensate employees properly for regular or overtime hours worked.