Q: Our company has several employees who are working from home during the pandemic. They primarily perform data entry tasks, along with some administrative support duties.
Because they're working remotely, we don’t keep track of their hours. The company has agreed to simply pay them a weekly salary with a requirement that they accomplish certain tasks, and we’ve designated them as exempt.
One of those employees claims we owe her for unpaid overtime, even though we never authorized her to work overtime. How do we prove that she's not entitled to this pay?
A: Unfortunately, this may be an uphill battle for your company. The federal Fair Labor Standards Act and Connecticut’s wage and hour laws govern which employees are exempt from minimum wage and overtime rules.
An employer cannot simply designate its employees as such. In order to be exempt, an employee must pass the duties test and the salary test.
Exempt duties are divided into five basic categories, often known as “white collar” exemptions:
- An administrator performs non-manual office tasks that involve the use of discretion and independent judgment that directly relate to managing the company.
- An executive manages a company or department, directs the work of at least three other employees, and has the authority to hire and fire.
- A professional employee may be exempt if he is either a “learned professional” whose primary work requires advanced knowledge, such as a lawyer, doctor, or engineer, or a “creative professional” whose primary work requires invention or imagination, such as an actor, musician, or painter.
- An employee with an outside sales exemption is someone who makes sales while regularly engaged away from the employer’s place of business.
- A computer employee’s tasks involve systems analysis or computer program design and development.
An employee must fall into one of these five categories to be exempt.
However, this does not end the inquiry.
With the exception of the sales group, exempt employees must also meet the salary test.
This means the employee earns a predetermined amount each pay period, at the minimum rate of $475 per week, regardless of the number of days or hours worked.
Based on this, the remote employees in this case do not meet the exemption requirements.
The fact that they’re paid on a salary basis—even if they earn the required minimum—does not mean that they’re exempt.
If they’re doing data entry and administrative tasks with no management responsibilities, they don’t meet the requirements of either an administrator, an executive, a professional, a sales, or a computer employee.
As non-exempt employees, they must be paid at least minimum wage and overtime.
So what does this mean for your company?
It means you need to keep time records for these non-exempt employees—whether remote or not—so that you can prove what hours they worked, and for what hours they were paid.
The company’s failure to maintain time records creates a presumption that the employee’s version is correct.
In other words, you must somehow disprove—without records—that the employee worked overtime.
Thus, the uphill battle. It does not matter that the company never authorized the overtime—only that the employee says she worked it.
So, going forward, carefully evaluate each employee’s duties and pay structure, make an informed decision regarding their exemption, and keep time records for non-exempt employees, regardless of their remote or in-person status.