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Welcoming Our Robot Overlords? Navigating New Guidance on AI
Thursday, May 23, 2024

As technology continues to evolve, so do the dynamics of labor and employment. The Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL) recently issued Field Assistance Bulletin No. 2024-1 (FAB 2024-1). FAB 2024-1 is a groundbreaking document shedding light on how the DOL thinks artificial intelligence (AI) and automated systems in the workplace could result in a violation of the Fair Labor Standards Act (FLSA) and other federal laws.

Understanding FAB 2024-1

FAB 2024-1 delves into the intersection of AI, automation, and federal laws, providing guidance for employers. Specifically, FAB 2024-1 addresses various issues that come up when employers use AI and automated systems for scheduling, timekeeping, tracking employee location, and calculating wages. It also elaborates on the implications of AI and automated systems use under other federal laws.

Scheduling, Timekeeping, and Tracking Employee Location

The initial portion of FAB 2024-1 focuses on the potential hazards associated with the utilization of AI or automated systems in overseeing employee productivity and breaks. The WHD recognizes that some employers use AI or automated mechanisms to monitor employees’ activity or inactivity, for example by computer keystrokes, mouse clicks, or the presence of an employee in front of a computer’s camera. The WHD, however, advises employers that it does not believe these systems determine whether an employee is performing “hours worked” under the FLSA.

The next portion addresses the monitoring of break time. Some employers now utilize timekeeping systems that incorporate AI and make predictions and auto-populate time entries based on a combination of prior time entries, regularly scheduled shift times, and break times. Although such use of AI may help with efficiency, the WHD warns that these “smart” entries do not relieve an employer of the obligation to ensure that records are accurate and that an employee is paid for all hours worked.

FAB 2024-1 continues to address potential issues with “waiting time” and ensuring that such time is counted as hours worked. AI and other technologies can now assign tasks and set work schedules. Although AI can streamline scheduling, employees may still need to be paid for “hours worked” when waiting for their next task to be assigned or their schedule of assignments to be updated.

The FLSA counts many waiting periods as hours worked. Thus, the time an employee waits on an AI program to assign their next task should be paid. To ensure compliance, employers must ensure that they accurately account for increments of time when employees were waiting for their next assigned task, as well as the time an employee was completing assigned tasks, regardless of technologies used to assign tasks, set schedules, or complete other management functions.

Moving along, FAB 2024-1 addresses issues that may arise when employees perform work at different geographic locations. Under the FLSA, employers are responsible for accounting for work performed beyond the scheduled shift or away from the employer’s premises. Some employers use location-based monitoring to track employees, which an automated system processes to determine whether an employee is “working.” Some geolocation software can track employees’ locations and automate the clocking in and clocking out process, based on what the system determines to be hours worked. These systems often use GPS technology from an employee’s phone or other wearable devices to determine the worker’s location relative to a jobsite. Based on location, an automated system records what it determines to be employees’ “work hours” as they enter and leave the jobsite. The use of location monitoring to determine work hours, however, may create compliance problems where such systems fail to account for work performed in different locations.

For example, a system that records only the time the worker spent at the worksite as compensable work hours when the worker is performing work away from the worksite may fail to account for compensable travel time between worksites or hours worked at other locations and may result in unpaid wages or overtime pay. Employers should therefore exercise responsible human oversight when using such systems to ensure that they are properly accounting for and compensating employee work hours.

Calculating Wages

FAB 2024-1 also addresses the calculation of wages. Under the FLSA, employers must pay employees at least the federal minimum wage for every hour they work and at least one and one-half times their regular rate of pay for each hour worked in excess of 40 in a workweek.

Employers that use AI or other technologies to calculate wage rates (e.g., piece rates, commissions, hourly wages, salaries, non-discretionary bonuses, or other compensations) must ensure that employees are paid in accordance with federal minimum wage, overtime, and other wage requirements, even when those wage rates vary substantially due to a host of inputs. Some AI systems use automated algorithms to independently calculate and determine workers’ rates of pay based on a variety of data and metrics collected by the systems. Such data can include fluctuating supply and demand, customer traffic, geographic location, worker efficiency or performance, or the type of task performed by the employee.

Some systems can automatically recalculate and adjust a worker’s pay rate throughout the day, which may result in significantly different regular rates from one workweek to the next. Similarly, some automated task assignment systems can determine the number or types of tasks assigned to individual workers, based on a variety of factors and metrics. Where a worker is paid on a piece rate or per task basis, and where their assigned tasks fluctuate throughout the day, this may also cause the worker’s regular rate to differ from workweek to workweek. Employers should therefore exercise proper human oversight to ensure that such systems pay employees the applicable minimum wage and accurately calculate and pay an employee’s regular rate and overtime premium.

Additional Federal Laws WHD Thinks Could Be Potentially Impacted by AI

FAB 2024-1 also addresses the use of AI and automated systems and possible legal implications under the following federal laws:

  • Family Medical and Leave Act (FMLA) – Under the FMLA, employers are prohibited from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any FMLA right. If an employer uses an AI system to track and analyze leave use, it must make sure the data is not used in a way that discourages the use of FMLA leave or counts FMLA leave use as a negative factor in employment actions.
  • Providing Urgent Maternal Protections for Nursing Mothers Act (the PUMP Act) – Under the Pump Act, most nursing employees have the right to reasonable break time and space to express breast milk while at work. The use of automated scheduling or timekeeping systems that limit the length, frequency, or timing of a nursing employee’s breaks to pump would violate the act’s reasonable break time. Additionally, those systems should not require an employee to make up for the time they spent taking pump breaks.
  • Employee Polygraph Protection Act (EPPA) – The EPPA generally prohibits private employers from using lie detector tests on employees or for pre-employment screening of individuals. Some AI technologies, however, can use eye measurements, voice analysis, micro-expressions, or other body movements to suggest if someone is lying or to detect deception. An employer’s use of any lie detector test, including any such device that utilizes or incorporates AI technology, would be prohibited by the EPPA unless used in accordance with the limited exemptions provided for in the law.

Implications for Employers

FAB 2024-1 serves as a roadmap for how the WHD thinks employers should integrate AI and automation into their labor practices while maintaining compliance with federal law. It underscores the need for transparency, accountability, and oversight when implementing AI-driven systems in the workplace. Employers must carefully assess the impact of these technologies and ensure their use complies with the various laws — because WHD will be looking for violations.

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