Risk from Work Off-the-Clock Just Got Bigger! | DCR Workforce Blog

Risk from Work Off-the-Clock Just Got Bigger!

Work off-the-clockEarlier this month, the government announced the addition of 288,000 new jobs in the month of June. While some viewed it as a cause for celebration, others noted a sharp rise in the number of part-time workers who prefer full-time jobs. The total jumped by 275,000 to 7.5 million, the Labor Department said. For the first half of 2014, the average workweek has stagnated at 34.5 hours. While the economists attempt to sort out the impact of the growth in part-time positions, we’re asking a different question: Are workers actually seeing a reduction in the average work week, or a rise in the “off the clock” work?

With recent revisions to minimum wages, hourly pay has increased in many states with corresponding increases to overtime pay, compensation for missed meal breaks and vacation pay. The Department of Labor is also working to review and revise its existing regulations related to overtime payment eligibility. These revisions are expected to push the weekly payment thresholds, expanding the number of workers classified as “non-exempt” and rendering many more workers eligible for overtime pay. Each of these developments is bound to create an additional financial liability for employers.

As labor costs increase, reports of workers being made to punch out on the timekeeping system, only to return to work without payment for the additional hours worked. This practice is referred to “off the clock” work, and is illegal.

Compensation for all hours worked, including premium rates paid for overtime, is a non-exempt worker’s inalienable legal right which cannot be denied by an employer or relinquished (through any agreement or clause in a contract) by the workers themselves. Work off-the-clock exposes the employer to the risk of a class action, wage and hour lawsuit. So, why do some employers continue with this practice?

  1. ‘Off the Clock’ work is a violation of the Department of Labor’s Wage and Hour regulations. Unfortunately, these cases are hard to prove as no records of the violation exist.
  2. Workplace policies which prohibit managers from authorizing overtime (as a cost control mechanism or for any other reason) tend to encourage the practice of getting workers to work off-the-clock.
  3. The Affordable Care Act stipulates that coverage must be extended to individuals who average 30 or more work hours per week. Many fear that this may encourage employers to restrict worker hours, but make them work off-the-clock to meet performance targets.
  4. If employers offer a pension plan governed by the Employee Retirement Income Security Act (ERISA), and then artificially reduces the workers’ hours (showing them as part time workers), the worker may lose eligibility for plan participation. Employer liability for affecting the worker’s coverage would – at a minimum – include re-instating the worker to a full-time position and compensation for any lost benefits.

The best protection an employer can have against such liability is to ensure that all hours worked by each of the workers are properly recorded, and to take swift and severe action against any manager requiring off-the-clock work.

The strongest protection lies in the use of systems which automate work scheduling, manage worker exemption classification, administer time reporting and payroll computation, and retain documentation to support any future audits . They must also establish work policies to control overtime authorizations, ensure an accurate reporting of time, eliminate pay inaccuracies, and allow corrections when needed.  Remember that the onus of maintaining accurate records of regular and overtime work is on the employer and not the employee – so any transgressions will have to be handled with zero tolerance.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.