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Mass Telework During Virus Pandemic Sets Stage for Wage Battles

March 23, 2020, 6:57 PM

Mass telework blurs the lines around when an hourly worker punches in and punches out, potentially sparking wage and hour battles between employees who typically work in the office and their employers.

The novel coronavirus also could trigger legal issues surrounding who’s eligible for overtime pay and requirements to be on call, an issue already vexing some courts. Employee reimbursement laws could activate in certain states, questions about disability accommodations will linger, and privacy issues also confront employers, attorneys warn.

Covid-19 has brought these issues into sharp focus for many employers that aren’t used to managing a remote workforce, as they have typically expected certain jobs to be performed in the office. These can include office workers, such as paralegals, and some technology, accounting, or human resources positions.

Meanwhile, employees fear saying no to work off the clock or pressing other rights with a sinking economy and widespread layoffs looming, attorneys say.

“It’s a situation that is going to be ripe for a lot of gray areas,” said Garrett Broshuis, an attorney in St. Louis with Korein Tillery, who represents workers. “We live in a world where you can telework, but at the same time, employers need to be careful to have strict guidelines in place. This could lead to pitfalls for companies.”

Overtime Issues

Under federal wage and hour laws, salaried workers who are considered exempt from minimum wages or overtime requirements get paid no matter how many hours they work. There are dozens of overtime exemptions under the federal Fair Labor Standards Act alone, including for administrative, executive, and professional employees who are likely in the best position to telework.

The distinction for who qualifies as exempt has roiled the Labor Department in recent years and led to numerous lawsuits, including against JPMorgan Chase & Co., American Express Co., and Steak ‘n Shake. Workers who weren’t classified as eligible for overtime have often sued, something that could spike given mass telework and potentially long working hours.

Non-exempt employees, meanwhile, make money by the hours they work and are guaranteed time-and-a-half pay over 40 hours.

“Companies are trying to figure out how many hours the person is actually working,” Broshuis said. “It’s a different era for a lot of companies who aren’t used to working this way.”

Employers must look carefully at state and federal requirements for hourly workers to make sure all the work is captured, said Henry Perlowski, an attorney for Arnall Golden Gregory in Atlanta.

“Otherwise, you are going to have situations where it’s ripe for wage and hour claims,” Perlowski said. “And whether it’s federal or state, those claims are difficult to defend.”

During this pandemic, parents also will have childcare responsibilities because of school closures, making it more difficult to track hours, he said. It’s likely that employers that have been resistant to remote work may have to accept the fact that a 9-to-5 job with a 30-minute lunch may not be practical. But if companies are forced to lay off hourly workers, claims could emerge for late-night texts or emails that an employer asks remaining workers to respond to or work assigned after the end of a shift, Perlowski said.

“I just think this is going to happen a lot more,” he said. “There will just be more claims. You want to have systems in place to best prepare yourself for that.”

‘Huge Trust Factor’

The U.S. Court of Appeals for the Ninth Circuit on March 19 addressed another critical issue: on-call work, when an employee is scheduled for a call-in shift but only comes into work on an as-needed basis. The Ninth Circuit found that California retailers must pay employees for those shifts.

This issue could become more prominent as employers cut back on hours or adjust schedules, employment attorneys said. Federal law has a test to determine when the call-in work should be paid, and California has a more lenient standard, Broshuis said.

Teleworking for hourly workers could test many of the reasons some employers are reluctant to do widespread remote work because of a “huge trust factor,” said Rob Duston, partner in Washington with Saul Ewing Arnstein & Lehr.

“There are expectations clearly set in an office environment. At home, it should be no different,” Duston said, adding that there could be situations where workers fear to ask for the time they are owed.

“This is all coming at a time when employers are carefully watching expenses and additional costs,” he said. “Facing a potential layoff, there may be the potential to go above and beyond because people are scared to lose their jobs.”

State Considerations

Some states have extra restrictions for remote work. If mandating telecommuting, for example, California law requires employers to pay for business expenses such as cell phones and internet usage. Keeping time records is the best way to ensure compliance with meal and rest break laws, as well as overtime and minimum wage requirements, said labor and employment partner Katherine Catlos at Kaufman Dolowich & Voluck in San Francisco.

She also said federal and state wage and hour laws could be triggered if employers deduct pay from an exempt employee. The FLSA requires employers to pay full salary to an exempt employee performing any work during a given workweek, Catlos said. California law doesn’t allow deductions from salary for absences of less than a full day for personal reasons or for sickness.

Some employers may require exempt staff to take vacation or paid time off in the case of an office closure due to Covid-19, whether for a full- or partial-day absence. If the exempt employee doesn’t have sufficient vacation time or PTO available, the employee still must receive the full guaranteed salary for any week in which he or she performs any work to maintain exempt status. The exempt employee doesn’t have to be paid for any workweek in which no work is performed. But Catlos said employers should cross-reference their employee handbook to confirm the company hasn’t offered more generous benefits.

“If an exempt employee works any portion of a day, there can be no deduction from salary for a partial day absence for personal or medical reasons,” Catlos said. “Federal regulations allow partial day deductions from an employee’s sick leave bank so that the employee is paid for their sick time by using their accrued sick leave.”

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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