United States: Employers Beware: Pre-And Post-Shift Work May Be Compensable Time For Non-Exempt Employees: Monitor Now Or Pay A High Price Later

Originally published in New Hampshire Business Review

Question: I run a customer service call center. My employees work 8 hour shifts with a half hour meal-break on each shift. Our employees are expected to be at their desks ready to start taking calls as soon as their shift begins. This requires them to come in a few minutes early to sign into the system and get their work stations ready. I pay my employees from the start of their shift. One of my employees has complained the he should be paid from the time he starts to prepare his work station, not just from the time when his shift begins. Who is right – me or my employee?

Answer: Your employee is right. He should be paid from the time that he starts to work. If you don't want to pay for time worked prior to the start of his shift, you should ensure that your employee is not working before that time. Failing to properly compensate employees for pre- or post-shift work is a violation of federal law. In addition, if your employee is working more hours than his regularly scheduled shift for any pre- or post-shift work, he may also be working more than 40 hours per week which would entitle him to overtime pay. Under the Fair Labor Standards Act, employees who are not exempt must be paid for all time worked, and must also be paid time and a half their regular rates, including commissions, bonuses and incentive pay, for hours worked beyond 40 per week. Employers are required to pay at least the federal minimum wage of $7.25 for all hours worked, and to maintain accurate time and payroll records.

In 2010 alone, the United States Department of Labor collected $133,207,822 from employers in back wages for overtime due. This supports that the issue raised by your question, of not paying for time worked outside of the regularly scheduled shift time, is a common issue that many employers do not handle correctly. Waiting time, on-call time, pre- and post-shift work, lecture, training time and travel time are all examples of time that may potentially be compensable to hourly, nonexempt employees. Failing to properly pay your employees for all hours worked can result in liability for back wages, penalties, fines and even costly litigation.

On July 6, 2011, the United States Department of Labor announced the results of just one case in which an insurance call center agreed to pay $1,520,705 in overtime back wages to 3,459 employees for time worked pre- and post-shifts. The USDOL Wage and Hour Division conducted an investigation that disclosed widespread violation of the Fair Labor Standards Act overtime and record-keeping provisions. The investigation covered call centers in six different states and 11 customer service call centers. Through interviews of employees and a review of the company's payroll and timekeeping systems, the DOL learned that employees routinely worked an average of 30 minutes of unrecorded and uncompensated work each week. The time involved included work such as turning on work stations, logging onto the company phone system and initiating certain software applications necessary to begin their call center duties. Because the employees' pre-shift work time was not recorded on official time records, they were not paid for all hours worked and not paid time and half when their hours exceeded 40 in one week. The insurance company agreed to pay the back wages and also to ensure future compliance with record-keeping and compensation laws.

Overall, employers should monitor their workplaces to ensure that employees do not engage in pre- or post-shift work, or other work outside of regularly scheduled shift time, unless the employer wants to pay for the time worked. Should an employee continue to work during non-shift work hours, the employer is still required to pay for the time but it could become a performance issue. The employer could provide the employee with notice or a warning that he or she should not start before the start of the shift and should ensure that work is completed by the end of the shift. But, the employer should pay for all time actually worked by nonexempt workers. For salaried, exempt employees, this is not an issue since such workers are paid a set rate regardless of the hours worked each week.

It should also be noted that this issue is not isolated to a call center. Many companies have jobs where some start-up time is required before an employee can begin to work. Bank tellers who need to get their work station ready before their window opens, or machine workers who need to start machines up before work can be done are just two examples. Employers should take care if employees engage in potentially compensable work-time such as doing work at home, taking or receiving work-related telephone calls at home, working through lunch, taking breaks of less than 20 minutes duration, doing "volunteer" work duties, or working before or after regularly scheduled work shifts. All of these may be time an employer must pay for and, if the actual hours worked in a workweek amounts to more than 40 hours, entitles a nonexempt employee to time and half their regular rate of work. Employers should ensure that they monitor the situation now to ensure compliance or, as the above insurance company found out the hard way, pay a costly price later.

Linda Johnson chairs the firm's Employment Law and Education Law Practice Groups at the law firm of McLane, Graf, Raulerson & Middleton, Professional Association.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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