Violating federal and state labor laws can lead to fines, lawsuits, and damage to a company’s reputation. Every year, the U.S. Department of Labor hands out hundreds of millions of dollars in fines and back wages related to violations. Willful and repeated violations can even wind up with criminal penalties.
While companies generally understand the rules on pay and overtime, there are certain times when a business must still pay employees when they are not necessarily working. These are less known and can easily create potential problems.
Labor laws are constantly evolving and there are state and local regulations that must also be met. Companies should always consult with HR experts to ensure they are complying with any applicable laws. Here are some of the more common scenarios that occur and employers should know about. These scenarios are designed to be general guidelines and not legal advice.
Rest and Meal Breaks
Federal law does not require that employers provide meals or rest periods. However, any rest break or time off from work lasting 20 minutes or less must be paid as time worked for nonexempt employees.
Meal breaks of 30 minutes or more can be unpaid if employees are completely relieved of job duties and can use the free time however they want. However, if employees are required to perform work during their meal breaks, they must be paid whether they are working or not.
For example, if an employee is required to stay on-site and answer phone calls or greet visitors, they are entitled to pay even if they do not answer any calls or see any visitors. To avoid paying employees for lunch breaks, they must be free of all duties during that time.
Many states have stricter labor laws regarding meal times and rest breaks. In most cases, employers are required to provide meal breaks that vary between 30 and 60 minutes depending on industry and state.
Business Travel Time
The Fair Labor Standards Act (FLSA) requires employers to pay nonexempt employees for time spent traveling for work during regular work hours. This applies even if the travel takes place on weekends, holidays, or other non-workdays outside the normal schedule.
For example, if an employee typically works Monday through Friday from 8 am to 5 pm, any job-related travel that occurs between that time must be paid. This is regardless of whether it falls on a Saturday, Sunday, or holiday when the employee would normally not be working. Employers must ensure employees are compensated for all travel that cuts across standard working hours.
Besides normal work hours, travel time must also be paid for nonexempt employees completing assignments in other cities or locations away from their regular worksite. Also, any required work during a commute requires pay.
Most job-related training time must also be included in payroll for nonexempt employees. However, there are some exceptions. Employers can avoid paying employees only if the training meets four criteria:
- Training is voluntary and not required as part of employment.
- Training occurs outside of normal working hours.
- Training is not directly related to the employee’s current job duties.
- No productive work on behalf of the employer is conducted during the training time.
If training occurs during normal working hours or is required as part of their current role, training time should be paid. For example, if a cashier is required to take a training course on a new point-of-sale (POS) software, they would need to be paid. Learning the new POS system is essential to fulfill their job duties.
However, if the same employee was taking courses to become a manager on their own time outside of work hours, there would generally not be a requirement for pay.
If a nonexempt employee is required to remain at a workplace waiting for work, the time must be paid even if no work materializes. For example, workers may arrive at a job site per their schedule, but inclement weather postpones work. If employees are required to wait for several hours until managers decide to shut down operations for the day, employees need to be paid for the waiting time even if they did not do any work.
Some states also have regulations regarding minimum reporting times or call-in pay if workers show up and are told there is no work that day.
If your company requires drug testing as a condition of employment, nonexempt employees need to be paid for the time to take the test, traveling to and from the testing location, and any time waiting to take the test. This applies regardless of whether the test takes place during normal work hours or outside of their scheduled times.
Pre-employment drug tests are not required to be paid, but any team members already on the payroll are eligible for pay. The time also needs to be included in any calculations about hours worked to determine overtime.
If an employee is required to wear protective safety gear as part of their job, the time it takes to change into the safety gear or remove it is also considered time worked under the FSLA. This includes safety equipment such as hard hats, steel-toed boots, goggles, gloves, masks or respirators, or other protective equipment required by the employer.
Federal laws require employers to pay employees for on-call time in certain situations. For example, if an employee is required to remain on call at the work site or nearby and they are unable to use the time for their own purposes, they must be paid. Once workers arrive after being called in, they must also be paid for the hours worked.
If on-call hours fall outside of normal working hours, employers generally do not have to pay. For example, if an employee is on-call but can remain at home and is free to do whatever they want, time can be unpaid.
There may also be other circumstances that require pay depending on the requirements employers put on on-call work. For example, if there are limits to what you can and can’t do—such as drinking alcohol while on-call, or you must respond immediately to calls—there may be a case for pay.
The FLSA provides guidance on pay requirements for employees who work extended shifts hours and are allowed sleep time. Such shifts occur in jobs like guards, ambulance drivers, or full-time caregivers.
For any shift of less than 24 hours, employees must be paid for the entire shift, even if part of that time is spent sleeping. So, if an employee works a scheduled 23-hour shift and sleeps for five hours during that shift, wages are owed for the full 23 hours.
For shifts lasting 24 hours or longer, the employer and employee can agree to exclude sleep time of up to eight hours as unpaid. This is only if the employer furnishes adequate sleeping facilities, and the employee can generally get five hours of sleep or more during that break. Any interruptions that prevent five hours of sleep, or require the employee to perform work during the scheduled eight-hour break, would count the entire time as hours worked.
For nonexempt employees, there really is no such thing as “off-the-clock” work. If employers ask employees to come in early to help set up before their shift or clean up the workspace after their shift ends, it’s considered work hours. The same would apply to filling out paperwork at the end of a shift, working during a meal break, or working overtime hours.
In some cases, an employee responding to an email or phone call during non-work hours must also be compensated. Such activities are difficult to control for employers—especially for a business that has nonexempt employees working remotely. Organizations should have strict guidelines in their employee handbook or policy manual to cover acceptable behavior and expectations.
Still, employers are required to pay nonexempt employees for all hours worked even if they violate company or wage policies. For example, if an employee is working more than 40 hours a week, but does not record additional hours for overtime pay, the employer is still required to pay them.
If employers willfully disregard wage and hours laws, such as telling employees not to record overtime hours, the potential penalties for noncompliance can be much more severe.
Employers Must Remain Compliant with Evolving Laws
Employers need to ensure they are paying employees as required by federal, state, and local wage and hours laws. It’s best to work with HR professionals to help remain compliant. When you work with a Professional Employer Organization like Resourcing Edge, you get access to specialized teams of HR professionals who can help you navigate the constantly evolving laws and regulations governing employee pay.
Resourcing Edge provides a single point of contact for payroll, HR, risk management, time and attendance, technology, and benefits to handle all of your personnel and payroll needs. Contact the HR experts at Resourcing Edge today to get a quote.