In employment and compensation, the term "compensable time" holds significant importance. It refers to the hours for which employees must be compensated by their employers. To navigate this crucial aspect of labor laws and ensure compliance, it's essential to have a clear understanding of what constitutes compensable time.
Before we delve into the specifics of compensable time, let's establish what work entails. The U.S. Department of Labor provides a comprehensive definition of "hours worked," encompassing the following:
Required On-Duty Time: This includes any period when an employee is obligated to be on duty, on their employer's premises, or at any other designated place of work.
Additional Allowed Work Time: It covers any extra time that employees are permitted or allowed (suffered or permitted) to work beyond their regular hours.
Federal law further elaborates on these concepts, primarily through the Fair Labor Standards Act (FLSA) and the Portal-to-Portal Act. Additionally, individual states may offer additional guidance on what qualifies as hours worked and when employees must be compensated.
The FLSA, established in 1938, plays a pivotal role in shaping labor regulations in the United States. It defines hours worked as mentioned earlier and introduces crucial provisions, including the federal minimum wage, overtime rules, restrictions on child labor, and gender pay equality.
The FLSA's minimum wage and overtime provisions apply to non-exempt employees, those who don't fall under FLSA exemptions. These employees are entitled to overtime pay at one and a half times their regular rate for hours worked beyond forty in a workweek.
To determine what qualifies as compensable time for non-exempt employees, certain principles are applied. For instance, short breaks of 20 minutes or less are typically compensated, while lunch breaks exceeding 30 minutes may not be, unless the employee performs work during the break.
Furthermore, even if a company is not deemed a covered enterprise under the FLSA, individual employees may still be covered if they engage in interstate commerce for their employer.
As an amendment to the FLSA, the Portal-to-Portal Act provides clarification on activities that are generally not considered compensable working time under the FLSA. It addresses explicitly activities occurring before or after an employee's principal work activities, including preliminary and "postliminary" tasks.
Employers must diligently review and adhere to the relevant laws and regulations at the federal, state, and local levels that pertain to their business.
Calculating compensation for an employee's principal job activities during regular work hours is usually straightforward. However, there are scenarios where clarity is needed, such as integral work-related activities like:
Activities essential for completing one's job should also be examined to determine compensability under FLSA guidelines. This includes:
Time spent in meetings, seminars, and training is generally considered compensable unless specific conditions are met:
The rules governing compensable travel time depend on the nature of the travel involved:
In essence, employers must accurately track, document, and compensate employees for hours worked. While the FLSA doesn't prescribe a specific record-keeping format, it mandates specific information for minimum wage and overtime workers. Additional record-keeping requirements may apply to unique situations, such as employees receiving lodging or working under unusual pay arrangements. Employers should also be aware of any state and local laws and regulations.
Employers are allowed to round employee work time to the nearest quarter-hour (15 minutes) using 7-minute increments, but this must be done accurately and consistently. Rounding should not always favor the employer. In some cases, union contracts may establish rounding rules, and employers should also consider state and local laws.
These considerations highlight the complexity of determining employee compensable time. To avoid the risk of fines and wage recoveries, businesses should stay informed about regulatory changes. If you work with a payroll provider, ensure they have a team of compliance professionals to assist you in navigating these intricate regulations and keeping your compensation practices in line with the law.
Are there any questions keeping you up at night? Ask a TPG Payroll & HR Specialist more about Compensable Time. Give us a call at 909.466.7876 today!
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