The COVID-19 crisis has complicated every facet of operating an enterprise, and wage and hour compliance is no exception. Because wage and hour disputes are so frequently brought as high-stakes class or collective actions, it is critical to get these issues right.

Jackson Lewis attorney Alison Crane, a principal in the firm’s Chicago office, discusses pandemic-related wage and hour compliance issues that employers should be prepared to address as businesses and organizations continue to wade through these unprecedented times.

Employees working remotely

Generally, exempt employees are paid a full salary that covers any work they have performed for the organization, regardless of whether they are working onsite or remotely. “However, compensating non-exempt employees who work remotely can create a trickier situation,” Crane warns. Because they must be paid for all the time they actually work, as well as overtime premiums, employers must act proactively to ensure these employees are accurately recording their compensable work time.

Particularly in light of non-work distractions that can arise throughout the day while employees are working at home, employers should consider implementing and clearly communicating a scheduling and work-time policy. It is also perhaps more critical than ever to incorporate a mechanism to accurately track when non-exempt employees start their shift, take breaks, and end all work-related tasks for the day.

The employer’s expectations related to the permissible amount of overtime work that may be performed and how to report it should be clear. Managers also should have a clear understanding of the overtime boundaries and expectations. In addition, employers may want to consider implementing a policy prohibiting their non-exempt workforce from working overtime hours without advanced written authorization from their supervisors.

Off-the-clock pitfalls. The increase of telework has led to a heightened risk of non-exempt employees performing “off-the-clock” work without their employer’s knowledge or approval. “Such an infraction is often committed by the most conscientious of employees, such as those who may log into their computer a bit early to get a jump on a big project or work late on a Friday to finish up before the weekend,” Crane explains. To prevent the thorny compliance issues that may arise, employers should work with counsel to audit their policies to ensure non-exempt employees know they are required to record all of their time worked, even if it is performed outside of their normal work hours.

A business that had its workforce located all in one state pre-pandemic may face very different compliance requirements if it allows teleworking employees to scatter to many states.

Crane also suggests that employers not turn a blind eye to potential violations of the work-time policy and proactively address and remedy non-compliance. This may include training supervisors to discipline any non­exempt employee found to be violating the policy by, for example, sending emails before or after their scheduled shift. But keep in mind that the employer still has an obligation to pay for all compensable work, even if it did not direct it. Employers may also consider configuring remote access capabilities to limit when non-exempt employees can work online to prevent the temptation to log in early, log off late, or access work email outside of working hours.

Multi-state relocations. Even pre-pandemic, many employers — particularly in the technology industry — had begun allowing their employees to work remotely from any location as opposed to requiring them to remain in the state where a regional or corporate office is located. In choosing to make such allowances, Crane suggests employers be mindful of the legal implications of what may be deemed a multi-state workforce, especially if compliance issues might lead to class action vulnerabilities. For example, the employer may be required to comply with the state laws in an employee’s new location, as well as any applicable municipal or county ordinances.

In some of the more employee-friendly jurisdictions, employee relocations can create a major compliance challenge for employers in the wage and hour context by imposing additional administrative and recordkeeping burdens. A business that had its workforce located all in one state pre-pandemic may face very different compliance requirements if it allows teleworking employees to scatter to many states. Additionally, as states and localities have rushed to enact new laws and ordinances to address the unprecedented workplace challenges of the COVID-19 crisis, there may be additional legal requirements that did not exist pre-pandemic.

The commissioned sales employee. The challenges of meeting in person with customers during the pandemic have resulted in sales employees increasingly reaching out to customers remotely, from their home offices. As a result, while these types of workers may have previously been classified as exempt pursuant to the FLSA’s outside sales exemption, employers should proactively consider whether these employees’ duties have changed in a manner that would require reclassification.

For example, one element of the exemption is that the employee is regularly and customarily away from the employer’s place of business. If that employee is working remotely (as has been the case for many during the pandemic), their home may now be considered the employer’s place of business. Consequently, the employer may need to reclassify the employee, either on a temporary or permanent basis. Employers that are considering keeping the new remote arrangement even after vaccinations are readily available, infection rates are down, and the country fully reopens should keep these issues in mind and consult with counsel to determine if any action should be taken.

Expense reimbursement. A potentially problematic compensation issue has arisen in states (e.g., California and Illinois) that have enacted laws requiring that employees be reimbursed for necessary work-related expenses. These requirements can create a myriad of questions for the employer not easily answerable without legal guidance. In addition to whether a specific expense is fully reimbursable (e.g., an industrial-sized scanner, a printer and ink cartridges, and the cost of increased internet or cellphone usage), questions may arise as to whether an employee who is telecommuting as a matter of convenience is entitled to reimbursement or should be required to utilize equipment and supplies that are available at the office.

Exacerbating the difficulty in Illinois is that, unlike California, the state’s statutory reimbursement requirements are vague. However, the statute provides some criteria as to what work-from-home expenses are reimbursable, including:

• The expense is incurred within the scope of employment;

• It is directly related to services performed by the employer;

• It is required of the employee in the discharge of their work;

• The expense is reasonable; and

• The expense inures to the primary benefit of the employer, not the employee.

“These guidelines can be useful to employers, even outside Illinois, in creating a reimbursement policy that puts clear limitations in place and reasonable expectations as to what will be reimbursed,” Crane suggests.