Coronavirus (COVID-19): Wage and Hour
Author: XpertHR Editorial Team
The coronavirus (COVID-19) pandemic has caused many employers to take (or consider taking) actions such as:
- Having employees work from home;
- Changing work schedules and job duties;
- Adjusting pay;
- Closing workplaces;
- Providing hazard pay and/or bonuses;
- Hiring temporary workers; and.
- Taking employees' temperatures.
All of these trigger wage and hour considerations that employers should carefully evaluate.
Employers also may use this resource to monitor temporary/emergency developments at the federal and state levels. (Permanent developments will continue to be covered in the Employment Law Manual and the Legal Timetable via XpertHR's usual updating process.)
Working From Home
Wage and hour laws apply regardless of whether employees work at a place of business or in their own homes.
So nonexempt employees must be paid the minimum wage and, potentially, overtime pay for all hours worked - whether they perform that work on an assembly line in a factory or on a couch in the comfort of their homes.
The same principle applies to overtime-exempt employees who are paid on a salary basis. They must receive their full salary for any workweek during which they perform any work at all, whether they perform that work in the office or in their homes.
As the US Department of Labor (DOL) reminded employers in its coronavirus administrative guidance, employees must be compensated for all remote work that the employer knew or had reason to believe was performed - even if the remote work was not authorized.
However, employers are not required to compensate employees for unreported hours of remote work that they have no reason to believe had been performed. In most cases, employers may satisfy their obligation to compensate remote work by providing reasonable time-reporting procedures and compensating employees for all reported hours.
Many timekeeping methods that work well in a place of business - such as punch clocks, biometric entries, etc. - are not practical when employees work from home. Nevertheless, the burden still falls on employers to maintain and preserve accurate records about employees' work time. For nonexempt employees, this includes start and stop times, the time of day and day of the week on which the employee's workweek begins, the hours worked each workday and the total hours worked each workweek.
As a result, employers should consider adopting online timekeeping portals or, if they already have them, customizing these portals to allow employees to clock in and out of work remotely.
Employers should educate employees about what constitutes compensable working time, and then implement and enforce policies requiring them to accurately track and report their working time.
Although it is not an iron-clad defense, it does not hurt to have employees sign a written acknowledgment certifying that they did not work off the clock.
Child Care and Other Personal Obligations
If employers allow employees to take time off in the middle of a normal workday for personal and family obligations, such as caring for their children whose schools have closed, they need not compensate them for all of the hours between starting work and finishing work, according to the DOL's coronavirus administrative guidance.
Normally, all time between the first and last principal activities of an employee's workday is considered compensable work time under the continuous workday rule. However, the DOL "recognized that applying this guidance to teleworking arrangement[s] would discourage needed flexibility during the COVID-19 emergency," so it waived this requirement in its rules for the Families First Coronavirus Relief Act.
An employer and its employees agree to a remote work schedule of 7:00 a.m. - 9:00 a.m.; 11:30 a.m. - 3:00 p.m.; and 7:00 - 9:00 p.m. on weekdays, allowing the employees to help teach their children whose schools are closed and to work during times when there are fewer distractions. The employees must be compensated for all 7.5 hours actually worked each day, but not for all 14 hours between their first principal activity at 7:00 a.m. and their last at 9:00 p.m.
Other Remote Work Issues
Remember, too, that many states require employers to provide nonexempt employees meal and rest breaks. Again, this holds true regardless of whether the employee works at home or a place of business.
Furthermore, many local minimum wage laws require payment of a minimum wage for all hours worked within the geographic boundaries of a particular city, town or county. If employees who normally work at business locations outside the boundaries of a locality with a high minimum wage start working remotely from homes located within the boundaries of that locality, they probably will need to be paid the higher minimum wage.
Reimbursement issues may arise around expenses associated with employees working from home (such as internet access, computers, additional phone lines, increased use of electricity, etc.). Some states allow employers to make deductions from employees' wages for the purchase of tools or equipment that are necessary for the job; however, the Fair Labor Standards Act (FLSA) prohibits such deductions if either:
- The required reimbursement reduces their earnings below the required minimum wage and any overtime compensation they may be owed; or
- Telework is being provided to a qualified individual with a disability as a reasonable accommodation under the Americans with Disabilities Act.
Conversely, some states may require employers to reimburse employees for these expenses.
Employers should consider the following steps to help minimize the risk of wage and hour violations resulting from remote work:
- Adopt and enforce a timekeeping policy;
- Customize a timekeeping form if necessary;
- Include a timekeeping statement in employee handbooks;
- Comply with federal and state recordkeeping requirements;
- Check state meal and rest break requirements; and
- Review rules about deductions above the minimum wage.
Work Schedules and Job Duties
Disruptions from the coronavirus (COVID-19) pandemic may also necessitate changes in work schedules and job duties.
In general, the FLSA allows employers to change adult employees' work schedules as they please. However, many states and localities have adopted laws that require employers to, among other things:
- Provide employees advance notice of schedule changes;
- Compensate employees for last-minute changes in schedule; and
- Pay employees a certain amount if they report for duty but are not provided a full shift's worth of work.
Some of these laws provide exemptions during natural disasters and other emergencies. While it is likely that the coronavirus pandemic will trigger these exemptions, an employer should consult with counsel before relying on them.
Furthermore, employers must ensure that any scheduling changes do not violate employment contracts and/or collective bargaining agreements.
Changes in job duties can also trigger wage and hour compliance challenges. In general, when an overtime-exempt employee's job duties change, their employer should reconsider their classification.
But during the period of a public health emergency declared by a federal, state or local authority with respect to COVID-19, otherwise-exempt employees may temporarily perform nonexempt duties that are required by the emergency without losing their exemption, the DOL said in its coronavirus administrative guidance. FLSA regulations allow otherwise-exempt employees to perform nonexempt duties during emergencies that "threaten the safety of employees, a cessation of operations or serious damage to the employer's property" and are beyond the employer's control and could not reasonably be anticipated. COVID-19 is consistent with these criteria, so employees who are temporarily required to perform nonexempt duties due to COVID-19 may do so without losing their exemption, as long as they continue to be paid on a salary basis of least $684 per week, the DOL said.
- Check the Scheduling Laws by State and Municipality 50-State Chart to see if your state or locality has a scheduling law, then review the Employment Law Manual for further details about potential exemptions;
- Comply with any state show-up time / reporting time requirements; and
- Review child labor working hour limits for any employees who are minors.
Changes in Pay
Nothing in the FLSA prevents an employer from reducing nonexempt employees' hourly rate of pay, as long as they are paid the minimum wage, and any overtime due, for all hours worked. However, some states require employers to notify certain employees any time pay rates chanage.
Employers also are not prohibited from prospectively reducing the predetermined salary amount to be paid regularly to an exempt employee during a business or economic slowdown, as long as the reduction is bona fide and not used as a device to evade the salary basis requirements. Such a predetermined regular salary reduction, not related to the quantity or quality of work performed, will not result in loss of the exemption as long as the employee still receives their weekly minimum on a salary basis.
On the other hand, deductions from predetermined pay occasioned by day-to-day or week-to-week determinations of the operating requirements of the business constitute impermissible deductions from the predetermined salary and would result in the employee forfeiting their overtime exemption. The difference is that the first instance involves a prospective reduction in the predetermined pay to reflect the long term business needs, rather than a short-term, day-to-day or week-to-week deduction from the fixed salary for absences from scheduled work occasioned by the employer or its business operations.
Of course, employers must continue to meet the federal minimum salary level of $684 per week - or any higher minimum salary level set by the states in which they operate.
- Review state pay rate notification requirements; and
- Meet minimum salary levels for executive, administrative and professional employees.
From a wage and hour standpoint, it does not matter if a workplace closure is the result of a government order, of business necessity, or of some other reason. What does matter is:
- The employee's status as exempt or nonexempt under the FLSA;
- The length and timing of the workplace closure; and
- Whether the employee performs any work from home or any other remote site.
If a worksite is closed for less than a full workweek, exempt employees must be paid their full salary. Failure to do so jeopardizes their exempt status.
However, the salary basis test prohibits only deductions from employees' monetary compensation, not their paid time off (PTO). An employer may deduct fractional or whole days from exempt employees' PTO for absences without violating the salary basis test. Similarly, if an exempt employee performs some work while out on PTO (such as responding to emails or answering phone calls), the employer also may make deductions from PTO without violating the salary basis test. Such deductions should be made in accordance with the employer's PTO policy. A PTO policy might specify that employees are not expected to work while on PTO and that any work performed will be considered voluntary; therefore, employees' PTO banks will still be deducted even if they perform work on a PTO day. Alternately, a policy might credit employees for some or all of their PTO if they perform a certain amount of work while out on PTO.
- Comply with the rules for paying employees during workplace closures; and
- Review PTO policies to see if they provide for deductions during workplace closures.
Hazard Pay and Bonuses
Many businesses are offering hazard pay and/or bonuses to reward or incentivize employees who may be exposed to an increased risk of coronavirus in the workplace.
As the DOL reminded employers in its coronavirus administrative guidance, the FLSA does not require hazard pay. However, hazard pay may be required under employment contracts or collective bargaining agreements.
Premiums paid for shift differentials and hazardous, arduous or dirty work must be included as part of an employee's regular rate of pay when computing overtime pay. This holds regardless of whether these payments take the form of a percent of the base rate or an addition of so many cents per hour.
Jane has a base hourly rate of $12. She is paid a hazard-pay rate of $15 for hours during which she has increased exposure to the public. In one workweek, she worked 30 regular hours and 20 hazard-pay hours. Her total straight-time compensation is $660 ($360 for 30 hours @$12/hour + $300 for 20 hours @$15/hour). Her regular rate of pay is $13.20 per hour. Her overtime premium is $66 ($13.20 regular rate x 0.5 overtime multiplier x 10 overtime hours). Her total compensation is $726 ($660 straight-time pay + $66 overtime pay).
Any nondiscretionary bonuses also must be included when calculating the regular rate of pay. Bonuses given out as a result of the coronavirus pandemic will most likely be considered nondiscretionary.
Whether to meet increased demand or to streamline their workforce, many businesses are hiring temporary workers as a result of the coronavirus pandemic.
Those that do must navigate a broad variety of employment law considerations, from workers' compensation to discrimination to benefits.
From a wage and hour standpoint, the safest course of action is to bring on temporary employees as employees and treat them accordingly.
If they are brought on as consultants or independent contractors, it is important to ensure they are properly classified. Remember, the longer they stay on with you, the more likely it is that they should be classified as employees (although no single factor is ever the final word in independent contractor classification).
Similarly, if temporary employees are hired through a staffing agency or some other third party, there may be a joint employment situation. In such cases, both employers may be jointly and severally liable for any violations of the Fair Labor Standards Act (and potentially other laws, such as the National Labor Relations Act).
- Review federal and state independent contractor classification criteria; and
- Brush up on the new FLSA joint employment rules.
Some employers are taking employees' temperatures before they return to work. In addition to taking measures to ensure such screenings do not violate the Americans with Disabilities Act, employers should consider whether employees should be paid for the time they spend undergoing the screenings.
In general, employees must be paid for all the time spent in "physical or mental exertion (whether burdensome or not) controlled or required by the employer and pursued necessarily and primarily for the benefit of the employer and his business."
One FLSA regulation, +29 CFR 785.43, states that time spent by employees in waiting for and receiving medical attention on the premises or at the direction of the employer during their normal working hours on days when they are working constitutes hours worked for which they must be paid. It is possible that temperature screenings could fall under this regulation since measuring an employee's body temperature is considered a medical examination under the ADA.
On the other hand, it is conceivable that pre-work temperature screenings could be excluded from working time as a preliminary activity, especially since temperature screenings are not likely to be considered an employee's principal activity. The US Supreme Court has held that certain pre- and post-shift security screenings could be excluded under this principle.
DOL Field Assistance Bulletin 2020-3 (Child Labor)
Federal law limits the hours of work during which 14- and 15-year-olds may work. These limits vary depending on whether or not school is "in session."
In Field Assistance Bulletin 2020-3, the US Department of Labor (DOL) clarified that a school will be considered to be in session during any week in which the public school district in which the child resides requires its students to attend school, either physically or through virtual or distance learning - even if the school has been physically closed as a result of the coronavirus pandemic.
DOL Field Assistance Bulletin 2020-6 (Seasonal Establishments)
In Field Assistance Bulletin 2020-3, the DOL announced that it will not bring enforcement actions against seasonal establishments that, prior to 2020, operated as amusement or recreational establishments, organized camps, or religious or non-profit conference centers for violations of the minimum wage or overtime requirements of the FLSA alleged to have occurred in 2020, as long as they:
- Canceled or limited their regular seasonal programming or operations for reasons related to COVID-19;
- Adopted related alternative programming or operations solely for 2020;
- Paid their employees at least the same wage levels and rates that they received when the establishment was operating as an amusement or recreational establishment, organized camp, or religious or non-profit conference center; and
- Have taken steps to abandon those alternatives and return to their normal operations in 2021.
California Electronic Submittal of Child Labor Work Permits Documentation
California law requires that a minor, accompanied by a parent or guardian, submit their application for a child labor work permit in person before the individual authorized to issue the permit (usually a school principal or administrator).
Effective September 11, 2020, applications may be submitted electronically if:
- The minor's school is physically closed for an extended period of time because of a natural disaster, pandemic or other emergency;
- The minor's application is complete; and
- The minor, accompanied by their parent or guardian, has attended a video conference with the person issuing the work permit.
Oregon Maximum Working Hours in Manufacturing Establishments
Effective March 27, 2020, through September 22, 2020, Oregon is allowing employers that manufacture products that "reasonably result in the preservation of life and property" to apply for an emergency exemption from the state law limiting working hours in certain manufacturing establishments for emergencies where life and property are in imminent danger. Temporary Administrative Order BLI5-2020.
Employers granted an exemption may employ workers for up to 91 hours per week - an increase of 36 hours from the standard 55-hour limit. A daily limit of 13 hours continues to apply.
Employers do not need approval from the Oregon Bureau of Labor and Industries (BOLI) before employees start working overtime, but they must provide the agency with notice within seven days and obtain signed consent forms from affected workers before increasing hours.
Further information can be found at the BOLI website.
Wisconsin Emergency Child Labor Permits Exception
An emergency rule from the Wisconsin Department of Workforce Development (DWD) establishes a temporary exception to the child labor work permits requirements from May 11, 2020, through September 1, 2020. During that period, employers may employ minors who are 14 and 15 years old and who have not obtained child labor permits as long as they:
- Sign a written intent to hire that specifies the job duties to be performed by the minor and the hours and time of day to be worked by the minor;
- Obtain all of the following information before hiring or permitting the minor to work:
- Proof of age, including a birth certificate, baptismal certificate, Wisconsin driver's license or identification card described in +Wis. Adm. Code DWD 270.07(1) or other evidence specified in +Wis. Adm. Code DWD 270.07(4);
- Written consent from the minor's parent, guardian or court-ordered foster parent consenting to the employment or a countersignature of the parent, guardian or foster parent on the written intent to hire described in section 1;
- A copy of the minor's Social Security card;
- After receiving all of the information described in section 2, email the DWD at email@example.com a notification that the minor has commenced employment, which must include:
- Attestation that the employer has reviewed the minor's proof of age and social security information;
- A copy of the employer's written intent to hire described in section 1; and
- The written consent from the parent, guardian, or court-ordered foster parent described in section 2(ii);
- No later than October 1, 2020, file a permit application on behalf of each minor employee hired and permitted to work under the emergency exception; and
- No later than October 1, 2020, pay the permit fee required under +Wis. Adm. Code DWD 270.08.