Stop Off-the-Clock Liability

Off-the-clock claims often involve small amounts of unpaid time that should have been compensable, but across organizations those amounts can add up fast.

“A single employee’s off-the-clock allegations can quickly expand into protracted litigation involving hundreds or thousands of potential plaintiffs” because off-the-clock claims are routinely filed as collective or class actions, said Natalie Bare, an attorney with Greenberg Traurig in Philadelphia.

The legal exposure can be significant, said Jeffrey Brecher, an attorney with Jackson Lewis in Long Island, N.Y. Back wages, double damages, attorney fees, and potential state-law penalties may be awarded for violations. States may have different requirements than the Fair Labor Standards Act (FLSA).

Employers can reduce risk through a combination of effective timekeeping systems, clear written policies, and meaningful training for managers and employees, Bare said.  

Liability risks are a particular challenge with remote and hybrid workers. 

Off-the-clock work related to artificial intelligence usage also must be prevented, but AI use during work time might reduce the number of claims.

What Is Off-the-Clock Work? 

 An essential preventative step for organizations and their managers is to understand what off-the-clock work is.

“Off-the-clock work is any work a nonexempt employee performs without recording the time — and therefore without getting paid for it,” Brecher said. “In practice, it often looks like replying to emails before a shift, finishing tasks after clocking out, or handling work calls during an unpaid lunch.”

In some cases, a manager might instruct an employee to clock out and continue working, but Brecher said that is rare. 

“More often, an employee voluntarily continues working past their shift because the employee may be dedicated — or needs to finish up work that was not completed due to daily distractions—but does not want to report the additional work,” he said. 

Newsletter: Workplace Compliance

Off-the-clock work sometimes occurs when an employee feels pressure to complete work during a limited period, but the task takes longer to complete, said Linda Hollinshead, an attorney with Duane Morris in Philadelphia. An employee may also feel they will get in trouble for working additional time and therefore not record it. “However, if an employer knows, or should have known, that the employee performed work, the time is compensable,” she said.

In addition to checking emails, off-the-clock work might involve responding to texts or accessing systems or work applications on personal devices after hours, said Russell Bruch, an attorney with Morgan Lewis in Washington, D.C.

Employers that let employees prepopulate their time sheets, automatically deduct time for meal breaks, or require employees to report only exceptions to their scheduled hours also often have their practices challenged, he added.

Off-the-clock work can happen inadvertently when an employee responds to an urgent work issue after clocking out, Bare said. “If that time is later reported and paid, there is usually no legal problem. But if that time never makes it onto the employee’s time sheet, the employer may face potential exposure for off-the-clock work.” 

Under the FLSA, employers may be held liable for off-the-clock work if they had actual or constructive knowledge of the work performed, even if not authorized. 

Toolkit: Complying with U.S. Wage and Hour Laws

Remote and Hybrid Work

Remote and hybrid work are common settings for off-the-clock work because the work is less visible, said Lisa Brauner, an attorney with Whiteford in New York City. “There is no supervisor present to see whether, for instance, an employee is taking their lunch break or working through lunch,” she said. 

Some states have break requirements and employers might be subject to financial penalty when an employee fails to take a statutorily required break, Hollinshead noted.

Also, remote workers often work more flexible or irregular hours, in many cases without their employer knowing, making it difficult to know when they are actually working, she added.

Remote work policies should clarify that employees are required to accurately record all time worked regardless of where or when the work occurs, Bruch said. Employers also should adopt time-recording systems and procedures that allow employees to record time worked remotely or after hours, he said. 

“To mitigate risk of off-the-clock claims, employers should consider monitoring timekeeping practices, providing training to employees and managers regarding what is compensable time, provide adequate staffing to avoid employees feeling pressured to work off the clock, and require regular audits to ensure compliance,” Bruch added. 

Employers also may want to consider requiring remote employees to verify the accuracy of their time records on a regular basis, such as daily or weekly, he said. “Managers should also review and verify the time records of their direct reports on a regular basis and not just rubber stamp their approval without considering whether the hours reported look accurate.”

AI Considerations

AI might reduce off-the-clock claims because it has the power to reduce time spent on tasks. Therefore, additional work hours may not be needed, Brecher said.

However, AI presents unique challenges from a risk management standpoint when it comes to off-the-clock claims, Bare said. “Unlike traditional work activities, it can be difficult to track precisely when and how employees are using AI tools, whether that use is occurring outside scheduled hours, and whether it crosses the line into compensable work time.” 

Bare recommended employers update their timekeeping and technology-use policies and related training materials to address AI tool usage, including off-the clock usage, and establish a mechanism for employees to report and be compensated for any such time.

“Employee use of artificial intelligence in the workplace may require training,” Hollinshead said. “As part of developing their internal AI policy, employers should include specific instructions for employees on when AI tools should be used and that training on AI tools should occur during the workday.”

Toolkit: Using AI for Employment Purposes

Guide Employees, Train Managers 

Employers should provide clear guidance to employees regarding their schedules, requirements on taking uninterrupted breaks, and reporting any time worked, regardless of how short, outside employees’ regular schedule or during what would otherwise be unpaid breaks, Hollinshead said.

As for supervisors, Brauner said employers should train them not to discourage or prevent employees from reporting time worked outside their regular shifts. 

In addition, she recommended that employers train supervisors to enforce time-reporting policies. Supervisors should be trained not to permit or direct nonexempt employees to perform work outside scheduled hours unless supervisors approve that time and employees record it, Brauner said.

“Nonexempt employees must be paid for such off-the-clock work,” she noted. But if that work is prohibited by an employer, it “can still discipline and fire employees who violate policies.”