From the April 2010 issue of Ceridian Connection.

Wage and hour considerations that may affect telecommuting and virtual work arrangements

The recent trend of working during normal business hours from a home office with the support of computers, modems, faxes, telephones and messengers, has raised and will continue to raise special wage and hour considerations. Telecommuting also need not be an all-or-nothing proposition. Employers are experimenting with many different models for alternative work arrangements. For instance, some employers encourage employers to telecommute two or three days a week. 

Telecommuting presents employers with an extra challenge of maintaining accurate records of an employee's regular and overtime hours. Since the work of telecommuting employees is conducted substantially or completely outside of the traditional workplace, employers are faced with difficult monitoring problems. As a result of such obstacles, employers are typically forced to rely solely on the employees to maintain accurate records of the hours worked during a workweek. 

Although telecommuting offers significant benefits in terms of flexibility and productivity, employers should be aware that the drawbacks may be significant where non-exempt workers are involved since the inability to maintain adequate and accurate records may place employers at a serious disadvantage in enforcement proceedings. 

Monitoring Concerns 
Once an employer decides that one or more of its employees can work from home, it should carefully consider which employees will telecommute and what sort of work they will be assigned. As a general rule, employers should permit telecommuting only with reliable employees who are self-motivated and consistently do good work. Employers will have far less to worry about with a known, trustworthy worker. Assigning clear project deadlines and requiring frequent contact and updates with the main office will further help an employer monitor its employees' work. 

Non-Exempt Employees 
If the employee is not exempt from the Fair Labor Standards Act (FLSA), the employer faces the obligation of maintaining accurate time records for the employee. This may be done with time sheets filled out by the employees or by having the employees log in on a computer or phone in at the beginning and end of their work hours. 

For hourly workers or salaried, non-exempt workers, employers may be concerned an employee will be tempted to exaggerate time records. One way to potentially reduce this behavior is to require employees to sign their timesheets certifying the hours they submit are correct. 

An employer that suspects exaggeration should pay the employee for the suspect hours, but then take other disciplinary measures. Because the worker is non-exempt, he or she may be suspended without pay. Revoking the telecommuting privilege could be another effective sanction short of termination for the employee who over-reports hours. 

At the opposite end of the spectrum, an employer must ensure that non-exempt telecommuters who exceed their regular work hours are properly paid overtime. The FLSA's overtime provisions apply to those working at home just the same as those who punch in at an office or factory. Non-exempt employees must be required to accurately report all time worked. An employer that suspects an employee is working unreported overtime has a duty to investigate and to make sure the employee is paid for the hours. 

Employers do not escape their overtime responsibilities merely by instructing telecommuting employees not to work overtime. Even if the employees are not authorized to work overtime, the Act will require they be paid for that overtime if the employer knew or should have known the employees were working those hours. 

It is thus essential for employers to make sure that their employees keep accurate accounts of their time, and that employers frequently verify this time. The Act places the responsibility of record keeping on the employer. If a dispute over hours arises later and the employer has failed to maintain accurate records, the Department of Labor will believe the employee's version. 

Adopting A Clear Policy 
Employers should adopt a clear, detailed policy regarding telecommuting. Such guidelines should cover specific hours requirements, methods of recording time, when a telecommuting employee should report to the office, and when and how that employee should take breaks. That way, both telecommuters and their employers will know from the start exactly what is expected of each of them. 

Ceridian HR compliance solutions show you how to cut through the "legalese" of legislation to answer your most troubling HR compliance and employment questions. More than just human resources software, our solutions are a complete suite of HR compliance products and services on topics that are of top concern for today's HR professionals and business owners.