The Legalities of Flextime

The very phrase flexible work arrangement carries with it a feeling ofease. And the results of telecommuting and flextime sound even brighter. Companyafter company reports improved retention rates, increased productivity, andhigher morale.

    But these arrangements aren’t quite as trouble-freeas you’d imagine. They’re affected by the Fair Labor Standards Act, workers’compensation, the Occupational Safety and Health Act, and even anti-discriminationlaws. Companies that ignore these issues do so at considerable risk. Fortunately,staying on the right side of these laws isn’t overly complicated. Stick to astrict list of dos and don’ts, and you’ll find that flexible work arrangementscan work well.

First things first — getting started
    There is, of course, no law demanding that you offeryour employees flexible work arrangements. But there are laws that will determinethe wording and structure of your policy. The key thing to remember as you takeyour first step is that you must have a policy. “These arrangementsneed to be thought of as a job assignment,” says Camille Olson, a laborand employment partner in the Chicago office of Seyfarth Shaw. “There shouldbe legitimate, objective standards spelled out in a written policy about whatpositions are open to these arrangements and what are not. It should not beinformal, because it could be viewed as a reward.”

    If telecommuting and flexible work schedules are distributedlike prizes for good behavior, those employees who are left out may become disgruntled– and if they tend to be women, or people of color, they may indeed have somethingto be angry about. “Cases come up in the discrimination area,” Olsonsays, citing the example of companies that let men work flextime but not women.” Ninety percent of the time, the complaints are tied to EEO or fair-employmentpractice issues (concerning) age, sex, race, ethnicity, disability.”

    As you’re constructing your flex-policy, also keepan eye on the wording of your benefits plans. Some health plans expect employeesto work 40 hours a week in order to be covered. Make sure that employees’ eligibilitywon’t be jeopardized because they elect to work 50 hours one week in exchangefor a 30-hour week the next.

Flexible schedules can mean trouble with the FLSA
    Once you have a policy established, you have to makesure you don’t bump up against the nemesis of flexible scheduling, the FLSA.By a wide margin, this legislation causes HR people the most trouble — forboth exempt and non-exempt employees. This brings up an important point: makesure you know beyond a doubt whether the employee who is planning a flexiblearrangement is truly exempt or not.

    Let’s begin with non-exempt employees and the FLSA.The basic rule impeding non-exempt workers from using flexible scheduling isthe fact that these employees are bound to a 40-hour workweek. For every hourthey work beyond that, they must be paid at least one and a half times theirregular pay. “Almost any problem you care to trace with flexible workweeksfor a non-exempt can be traced to the application of that seemingly simple rule,”says Dave Dabbs, a labor attorney in the Richmond, Virginia, office of McGuireWoodsLLP.

    It’s not an issue if you’re simply letting an employeework fewer hours and paying accordingly, or if you’re allowing employees topick their own starting time but maintain a 40-hour week. It becomes a big problem,however, if you’re trying to initiate a compressed workweek that looks somethinglike this: employees work a 44-hour week, with half of Friday off in exchangefor that extra four hours. Sounds great, but that structure means that all non-exemptemployees must be paid four hours of overtime. HR cannot simply call that Fridaya “comp day” and dismiss overtime pay. It’s illegal.

    There is an easy remedy. Simply structure the daysoff so that the 40-hour workweek isn’t exceeded. Many employers have turnedto four 10-hour days followed by a Friday off. HR should also take note of individualstate laws, which may impose additional wage and hour restrictions.

    Exempt employees present a different set of problems,because they must be compensated on a salary basis. Their earnings are basedon the quality of their work rather than the hours. “The essential problemwith doing flextime for exempts is that in some measure, exempts are alreadysupposed to be on flexible schedules, because you pay a salary for a job,”Dabbs says. “If the job gets done, you don’t need to make an inquiry intothe time spent doing it. It may have taken more than 40 hours a week, or less.But the idea is, Why should you care?”

    You can’t track the hours worked by exempts or placethese employees on a specific flexible schedule. To do so implies that theyare actually non-exempt, and that can spell big trouble. Ensure that your handbookdoesn’t contain language even implying that a salaried employee may be dockedwages in exchange for days off. “You can blow all your wage and hour exemptionswith that one mistake,” Dabbs says.

    In general, remember that exempt employees are by theirnature allowed to work flexibly if they can get the job done. Mary E. Bruno,a labor and employment law attorney with Greenberg Traurig, LLP, in Phoenix,says: “If an employer is keeping track of the hours worked by exempt employees,even just to see if they’re working a 40-hour week, the exemption can be lost.”

Telecommuting is easier under the FLSA — but there are other issues
    Because exempt employees are salaried, there are nospecific FLSA issues involved in telecommuting. For hourly workers, however,the timekeeping details are key. These employees have a different reportingrequirement if they work at home. Under federal law, hourly employees in theoffice must record to the nearest quarter hour the total hours worked that day– but exact time in and out for lunch and breaks doesn’t have to be noted.Hourly employees working from home, however, must record the actual hours theyspent providing their services. So if they stopped work at 10:15 for a personalphone call and returned to work at 10:30, this must be recorded. (Recordingcan be done by hand, however; there are no specific form requirements.)

    Many HR professionals have concerns about telecommutingcomplications resulting from the Occupational Safety and Health Act. As of now,there is little to worry about. OSHA suggested the idea of at-home inspectionslast year, but “they immediately pulled back — there was a firestorm,”Bruno says. For now, the only employees who can be subject to at-home inspectionsare those doing productive piecework such as lacing together purses or constructingwidgets. “But the concern is still out there: what is the employer’s obligationfor an employee who truly works from home?” Bruno asks.

    The issues surrounding workers’ comp are still beingresolved. If the employee is moving around her office, and trips on her dog,does this constitute a workers’ comp injury? “If you allow pets in yourworkplace, and you allow pets at home for this employee who is telecommuting,the answer is yes,” Olson says. But what about an employee who falls downwhile he’s walking to the door to sign for a package? If the package is fromwork, it’s probably a workers’ comp injury. If the package is a sweater he orderedonline, probably not. “The question will be: Were they doing work wheninjured?” Bruno says. “But workers’ comp can be a gray area at work.At home, it’s fraught with additional difficulties.”

    But as more and more companies take the plunge intonew ways of working, such problems will be straightened out. And in the end,most troubles are generally preventable — as long as HR remains fairly inflexibleabout understanding flextime arrangements.

Resources for Telecommuting:

• Research on work/familyissues, including flexible work arrangements.

• ITAC, the InternationalTelework Association & Council.

• The U.S. Office of Personnel Management, telecommutingpage.

• The Gil Gordon siteconsolidates information from around the world on telecommuting and relatedtopics.

• YouCanWorkFromAnywhere.com.Tips, tools, and resources to help improve the productivity of telecommutersand managers.

Workforce, October 2001, pp. 62-66 — SubscribeNow!