LABOR & EMPLOYMENT NEWSLETTER - COULD "STAYING CONNECTED" MEAN STAYING ON THE CLOCK?

Personal digital assistants ("PDAs") enable us, like it or not, to stay connected with our clients, customers, colleagues, and employees from most any place and at most any time of the day. They can also provide us with quick access to valuable information. For these reasons, PDAs have become commonplace in workplaces across many industries. In fact, many employers now equip employees with PDAs, just as they do other tools of the trade. Other employers simply permit employees to use personal PDAs to perform work-related activities. These realities raise the issue of whether the employer may be required to compensate employees for work performed via PDAs when the employee would otherwise be considered "off the clock." The answer to this question will depend on a variety of factors, including whether the employee is covered by the Fair Labor Standards Act ("FLSA")¹or a similar state law and the nature of the work performed on the PDA.

The FLSA regulates the national minimum hourly wage that covered, nonexempt employees must be paid, as well as the maximum number of hours those employees may work before becoming entitled to overtime compensation.² Generally, overtime compensation must be paid to an employee for each hour worked in excess of forty hours in a workweek at a rate of not less than one and one-half times the employee's regular rate of pay.³ However, the FLSA contains exemptions from its overtime pay provisions for several types of employees, including "any employee employed in a bona fide executive, administrative, or professional capacity, or in the capacity of outside salesman" and employees in certain computer-related occupations.⁴ In recent years, there has been an increase in actions instituted against employers to recover unpaid overtime compensation for classes of employees on the grounds that the employer misclassified them as exempt employees.

While it seems probable that many employees who are required or permitted to use PDAs during off-hours to stay connected to their jobs will meet an exemption for either "bona fide executive, administrative, or professional" employees or computer employees, it is increasingly likely that nonexempt employees will also be required or permitted to use PDAs as those devices become more prevalent across the national workforce. Moreover, the risk remains that some "exempt" PDA users will have been misclassified and thus, entitled to overtime compensation. The cost of noncompliance with the FLSA can be staggering.

In 2006, the Department of Labor's Wage and Hour Division, which enforces the FLSA, recovered more than $120.5 million in back wages for FLSA overtime violations.⁵ That amount represented approximately 89 percent of all FLSA back wages collected and the number of employees due overtime back wages accounted for approximately 87 percent of all employees due back wages.⁶ Federal regulations and the DOL caution:

It is the duty of management to exercise control and see that work is not performed if the employer does not want it to be performed. An employer cannot sit back and accept the benefits of an employee's work without considering the time spent to be hours worked. Merely making a rule against such work is not enough. The employer has the power to enforce the rule and must make every effort to do so. Employees generally may not volunteer to perform work without the employer having to count the time as hours worked.⁷

At this time, there is no reported case addressing whether time spent off-the-clock on work-related activities performed via a PDA is compensable overtime under the FLSA. However, in evaluating whether any off-the-clock employment-related activity constitutes time worked for purposes of the FLSA, the following factors must be considered:

1. whether the employer controls or requires the hours spent in the particular activity;
2. whether the employee has any freedom to leave the premises during those hours;
3. whether the employer is aware of and approves of the activity;⁸
4. whether the activity is primarily for the employer's benefit; and
5. whether the employee is free to engage in the employee's own activities during the hours in question.

The determination of whether "time worked" is compensable requires a very fact specific inquiry. It would not seem that the device or medium used to perform the activity at issue should significantly impact the inquiry. However, to the extent an employer provides a PDA to its employee or reimburses an employee, in whole or in part, for use of a PDA, the employer could more likely be found to be "aware of and approve of the activity" and possibly to "control or require" the additional work. And as a practical matter, an employer who provides PDAs or permits their use to perform work-related activities probably considers the practice to be in the employer's interest and for its benefit. In such situations, the work-related activity at issue could be found to be compensable.

All indications are that the use of PDAs will continue to increase and may do so at all levels of an organization. If you either require or permit employees to use PDAs in connection with their jobs beyond their normal workday, heed the warning. Be particularly mindful of how those employees are classified for purposes of the FLSA and consider instituting and enforcing company policies that either restrict the use of PDAs by non-exempt employees outside the workday or require those employees to properly report the time worked so that they can be paid. Alternatively, you might consider using employment contracts to define if, and to what extent, overtime work is permitted. No employment contract, however, can contravene the FLSA overtime provisions. In determining your approach, weigh the value and importance of additional work performed via PDAs (or any other medium) to your company against its projected cost to the company and potential liability exposure for FLSA violations.

¹ 29 U.S.C. §§ 201-219; 29 U.S.C. §§ 251-262.
² The current federal minimum wage is $5.15 per hour. 29 U.S.C. § 206. The Texas minimum wage law incorporates the federal minimum wage. TEX. LABOR CODE ANN. § 62.051.
³ 29 U.S.C. § 207(a).
⁴ 29 U.S.C. §§ 213(a)(1), (17).
⁵ 2006 Statistics Fact Sheet, Wage and Hour Collects $172 Million in Back Wages for over 246,000 Employees in Fiscal Year 2006, http://www.dol.gov/esa/whd/statistics/200631.htm. A significant amount of the back wages collected were for workers in low-wage industries. It is unclear how much of the overtime back wages collected were due to misclassification of employees.
⁶ Id.
⁷ 29 C.F.R. §§ 785.13, 778.316; elaws Advisors, FLSA Hours Worked Advisor at http://www.dol.gov/elaws/esa/flsa/hoursworked/screen1d.asp
⁸ Work that is not requested by the employer, but is "suffered or permitted" by the employer is work time, even if performed away from the employer's premises, the jobsite, or at home. 29 C.F.R. §§ 778.223, 785.11, 785.12.