What do Smartphones have to do with Overtime Liability Considerations?

Smartphones are ubiquitous in the workplace these days. In the past, employers issued these mobile devices only to high-level managers, but today employees at all levels of the enterprise often receive them, including non-exempt employees.

Smartphones help with connectivity and productivity, but what is the implication when non-exempt employees choose to use ― or their employers expect them to use ― their company issued smartphone when they’re off the clock (such as evenings and weekends) to reply to work e-mails or handle work calls? The answer should not be too surprising ― these employees will often demand to be compensated with overtime pay.

There are currently several lawsuits wending their way through the legal system questioning whether employees should be paid overtime for hours spent dealing with work-related emails, texts, and calls outside of normal working hours, so this issue should be top of mind for every employer in the U.S.

Legal responsibilities

The Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least one and one-half times their regular rate of pay for all hours worked over 40 hours within any given workweek. Generally speaking, under the FLSA “hours worked” are all hours spent by the employee participating in tasks related to work that benefits the employer, as long as the employer is aware or should have been aware of this work. This includes work-related telephone calls and emails that occur outside of their prescribed working hours.

Several top-tier companies, including Verizon and Black & Decker, have been sued for unpaid overtime related to smartphone use. It has been estimated that companies have collectively paid out more than $1 billion annually to resolve these wage-and-hour claims, which are usually filed on behalf of large groups of employees (the FLSA allows class actions known as “collective actions”). Employees who prevail in litigation can recover back wages plus interest, liquidated damages, attorneys’ fees, and costs.

Avoid expensive litigation

Because of the popularity of smartphones and the “always on” capabilities and access that they afford, it probably should not come as a surprise that FLSA collective actions involving smartphone use is increasing. While there are no fail-safe measures to avoid litigation, taking certain proactive measures will help minimize the likelihood that such litigation will be successful:

• Ensure that employees are properly classified as exempt or non-exempt. When in doubt, an audit of an employee’s compensation and job duties relative to wage and hour laws is in order.
• Develop a company policy for how smartphones are to be used, including a specific policy mandating that non-exempt workers are not to check email, or make or return phone calls, outside of normal business hours unless they have advance authorization.
• Develop a company specific overtime policy, and enforce it.
• Implement modern employee time tracking software to track, submit, and verify the accuracy of non-exempt workers’ hours, including remote hours. This will also guarantee that you have easy access to an audit trail, and can make this information available to regulatory authorities, if the need arises.

The bottom line

When it comes to issuing smartphones to non-exempt workers, a prudent employer would do well to proactively assess their risks, evaluate company objectives, and develop written protocols to effectuate the company’s goals before a serious issue arises. Advance planning, clear policies, and the right time tracking software solution will minimize the risk of unpaid overtime claims by an increasingly connected workforce.