Mitigating the Compliance Risks of a Remote Workforce

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Jul 16, 2020
This article is part of a series called COVID-19 Coverage.

The COVID-19 pandemic has forced large numbers of employees into unanticipated work-from-home (WFH) arrangements. Many organizations report that they are planning on having at least a portion of their workforces continue to work remotely for the foreseeable future.

A remote workforce can present a range of challenges for employers, including maintaining compliance with wage and hour laws. Indeed, many wage and hour compliance challenges for a remote workforce involve the accurate tracking and reporting of time worked. Unlike work performed at a physical worksite, in which employees clock in and out under the direction of a supervisor, remote employees have a much greater responsibility in time reporting, which can leave you vulnerable if you don’t manage this process effectively.

Below are common challenges that you may encounter with a remote workforce (mainly non-exempt hourly workers), along with strategies to mitigate the risk of incurring violations, as well as suggested procedures for establishing boundaries for employee “work time” and facilitating management oversight.

Provide Clear Guidance to Employees

Supervisors play a critical role in guiding and enforcing employee time-management policies. The presence of sound internal policies can play an important role, as well. However, organizational researchers have found that policies alone are often insufficient mechanisms to ensure compliance. Direct involvement by supervisors can help achieve the organization’s compliance goals.

Supervisors can have a large impact on compliance in two areas. The first involves providing clear expectations related to time tracking and reporting. Typically, this involves ensuring employees are aware of how to report their time, identifying how frequently it should be reported, and communicating the organization’s desire to pay employees for all time worked.

The second area is providing detailed guidance on which activities are “compensable” (and should be reported) and which activities are not. Determining activities that meet the legal definition of compensable work can be complicated and is sometimes the subject of considerable debate in the courtroom. The sudden shift to a WFH environment can further blur the distinction. Without proper guidance, employees are unlikely to have a consistent interpretation of compensable activities, leading to incorrect assumptions regarding what time should be reported.

For example, time spent performing activities such as booting up and shutting down computers, as well as exchanging text messaging and emails with coworkers outside of normal working hours, are sometimes not reported by employees as time worked. But they may be compensable in some circumstances. Clear guidance from supervisors can help to reduce inconsistencies and maximize accuracy of the time reporting.

Explore Technological Solutions

A variety of tech options are available to help promote accurate time reporting. For example, you may want to create a mechanism that allows employees to quickly and easily record time spent on compensable activities outside of the work shift. The greater amount of effort required for employees to report time in these situations will likely contribute to employees underreporting time.

Another approach to maximize accuracy in tracking work time is to implement software that has a “timer function.” Employees can activate and stop the timer as they perform different activities. To increase detail and efficiency, “activity codes” can be created to reflect the activity the employee is performing. Tracking work at this level of detail and frequency can improve the accuracy of information recorded. 

Some companies may also provide their employees with “thin client” computers. Unlike traditional computers, thin clients provide a gateway to the company server — employees must be logged-in to work. This function allows the employer to monitor the content and duration of employees’ work, as well as productivity in some cases. Additionally, access to a company server can be limited or denied during certain hours as needed. 

Scheduling Employees 

Another strategy for driving compliance in some contexts is to create detailed schedules with specific time segments allocated to different activities, including meal and rest breaks. Schedules can be distributed through a shared calendar program, such as Outlook or Google, and can help to eliminate ambiguity about expectations concerning remote work.

An added benefit to clarifying expectations is the reduction of negative psychological effects (e.g., stress, poor job attitudes) that many employees experience in work environments with high ambiguity.

Conduct Audits of Reported Time

Perhaps the best way to ensure that an employee is reporting time accurately is to perform an audit. Organizational researchers have concluded that monitoring of employees and administering visible consequences for noncompliance are often necessary for policies to be effective. Auditing time records provides a mechanism to evaluate compliance directly. It allows you to make corrections to reported time, which not only ensures that you pay employees properly for their work but also minimizes your organization’s legal exposure. 

You can use a variety of sources for auditing, including comparing company phone or email data to employees’ reported time, evaluating the length and timing of meal breaks, and looking for patterns of time rounding (e.g., always starting work exactly at 8 a.m.) or unexplained outliers (extremely high or low reported hours).

A detailed audit can be time-consuming and sometimes not feasible for all employees in all pay periods. In such cases, performing random or periodic audits can accomplish many of the same goals. Any issues found in a random audit may warrant further action, such as increased communication or more widespread auditing.

Driving Compliance Proactively

The rapid increase in the size of a remote workforce creates challenges related to compliance with labor laws. A variety of approaches exist to ensure that all work time is compensated for hourly employees and that the nature of the work is appropriate for exempt employees. The most effective strategy will depend on a number of factors, but you should be mindful and proactive about driving compliance. 

Given the potentially high exposure associated with noncompliance, it may be worthwhile for you to reevaluate current practices to reduce potential violations. Many of these approaches can be implemented internally, but you might benefit from working with external specialists to provide an objective evaluation of your remote workforce to maximize compliance with various employment laws. 

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.

This article is part of a series called COVID-19 Coverage.