Employers can unwittingly accrue liability for unpaid wages including overtime as a result of employees performing work on cell phones, particularly smart phones or PDAs, after hours or even during lunch breaks. The employee who is using a smart phone to send emails to colleagues or customers is probably working under the Fair Labor Standards Act (“FLSA”), meaning that the time devoted to those tasks is compensable time, which is time for which the employer has to pay. In the event that those minutes and hours push the employee over 40 hours per week, they will also trigger overtime liability. Although not an issue with exempt, salaried personnel under the FLSA, this can be a significant risk for hourly workers.
The problem has been exacerbated by the frequent use of emails, and the ability of managers and customers to reach out to employees at anytime of the day or night with requests and instructions. The time that the employee devotes to reviewing and responding to those messages may readily be deemed compensable time.
The employer that mandates its employees’ accessibility via PDAs significantly increases the risk of unpaid wage liability. This may raise issues of on-call time as well as actual work time depending on the frequency of off hours phone calls, emails, and other work direction.
The extensive use of PDAs has only recently been receiving attention in the courts and few decisions have yet been rendered. The trend will undoubtedly continue, however, and employees and plaintiff’s lawyers will become more savvy about how to exploit these practices and leverage their claims for wages and overtime.
Employers can reduce these risks by drafting proper policies and implementing sound PDA practices. Those policies should, for example, admonish employees to record all hours worked, direct that they not use company email or PDAs for after hours work, remind employees of the company’s overtime policies and need for authorization before performing overtime work and closely monitor telecommuting by nonexempt employees.
There is an argument to be made that an employer should not be liable for overtime if the employer had no actual knowledge of the off-the-clock hours worked by the employee. However, those arguments can be difficult to sell to a court and any encouragement by the employer of off-hours use of a PDA for business purposes could be fatal to that defense. If the amount of time devoted to these tasks is truly negligible, such as a short “yes” or “no” email after hours, there is not likely to be any risk of liability. However, lengthy discussions or long email strings may lead to a very different—and expensive result.
Obviously, exempt employees, who are paid on a salary basis regardless of the number of hours they work in a given week, do not pose any risk with regard to wage and hour exposure from their use of PDAs. However, the circumstances in which employees are exempt from the FSLA are quite narrow, and most workers will not qualify for them. This is a fact-intensive, case-by-case analysis that should be considered before attempting to make any employee exempt to avoid overtime risks.