By MARK MCGRAW, a frequent contributor about HR issues with Human Resource ExecutiveŽ, sister publication of Risk & InsuranceŽ
and where this article first appeared.
Working within the confines of the honor system is a noble idea, but it's one that may carry significant risks. A recent federal court decision in the case of Kuebel vs. Black & Decker (U.S.) Inc., has underscored that fact for employers.
In May, the 2nd U.S. Circuit Court of Appeals ruled that a lower-court judge in Rochester, N.Y., erred in dismissing a former Black & Decker employee's claim regarding unpaid wages for hours worked off the clock. The decision sends the case back to a lower court for trial.
Greg Kuebel, who was responsible for making sure Black & Decker products were properly stocked in Home Depot stores, alleges a supervisor told him the company didn't have the budget to pay him overtime and directed him to record only 40 hours a week on his timesheet.
"At least where the employee's falsifications were carried out at the instruction of the employer or the employer's agents, the employer cannot be exonerated by the fact that the employee physically entered the erroneous hours into the timesheets," wrote U.S. Judge Barrington D. Parker.
Kuebel sued the Towson, Md.-based corporation on behalf of about 130 "retail specialists" at the company, where he was employed from September 2006 to June 2007, according to court documents.
This case should send a clear message to employers that relying on employees who work outside the workplace to record their own time--and depending on supervisors to give them proper guidance on how to do so--carries significant legal risks, says Dan Yager, chief policy officer and general counsel for the HR Policy Association in Washington.
"(The decision) underscores (the notion) that, if the employee can convince a jury that he or she actually did perform overtime work--even if the employer didn't know about it--they can be awarded back pay," Yager said. "This becomes even more tangled--and expensive--if a class action is involved."
THE FOURTH DIMENSION OF WORK
To mitigate the risk of such a costly legal battle, employers must use caution when implementing a system in which employees--especially those working offsite--fill out and submit their own timesheets using smartphones or other electronic media, said John Anthony, an associate in the labor and employment practice group in the Los Angeles office of Seyfarth Shaw.
"The work world is changing. There is a fourth dimension of work, and that is the electronic world," he said.
"If nonexempt employees are given PDAs or at-home access to the work mainframe, or are expected to do anything after they are clocked out, then the company should make some policy changes," he continued. "The company may want to pay the employee for time working from electronic media at home, or have a policy forbidding such off-the-clock work."
Employers must also be aware that "there is no free labor, at least for nonexempt employees," Anthony added.
"This means that, if you are asking an employee to do anything at all--even sit and wait and do nothing--that person should be compensated at least at the minimum-wage rate, and that time should be considered in calculating the overtime rate owed," he said.
Employers, he said, must "be able to account for time worked. Such things as exceptions logs or remote clock-in abilities are helpful."
BANNING THE BLACKBERRY
While digital devices may offer nonexempt employees the ability to create more flexible work arrangements, some experts recommend limiting the use of smartphones by such workers.
Joan C. Williams, professor of law and director of the Center on WorkLife Law at the University of California-Hastings, recently said employers should not provide hourly workers with smartphones.
"If hourly employees are provided with PDAs and are expected to check them outside of work hours, then the time spent checking the PDA is work time, which makes employers potentially liable to wage-and-hour lawsuits if that time is unpaid," Williams said at a recent Capitol Hill event that focused on workplace flexibility for hourly workers.
Williams said she "would be surprised if the DOL were to make an exception to the wage-and-hour laws" regarding the use of PDAs by hourly employees.
The HR Policy Association recently sent a letter to Mary Beth Maxwell, a senior adviser to the Secretary of Labor Hilda Solis, seeking clarification on the DOL's position regarding the ability of employers to offer more flexible-work arrangements for hourly nonexempt employees by supplying them with smartphones.
Yager said the Kuebel decision may very well mark the beginning of a dangerous trend for employers.
"Litigation will continue as long as a 1938 law governs 21st century pay and scheduling policies," he said. "Employers who choose to undergo the expenses of litigation to contest these issues will win some and will lose some.
"Most employers will continue to settle; leaving the law unsettled," he said. "Those who are vulnerable that have not been sued will either roll the dice or try to shoehorn their workplace policies into the outdated strictures of the law."
July 7, 2011
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