What Counts as Compensable Work?

Employees must be paid for all time making up the regular working hours for which the employee is hired and for time devoted to the principal activities for which the employee is hired. Generally, the law says that an employee must be paid for:

• all time during which an employee is required to be:
  • on duty
  • on the employer's premises
  • at a prescribed workplace
• all time during which an employee performs work for the employer

Two conditions must be met. Therefore, two conditions have to be met: one of the three conditions relating to the employee's location plus the second, performance of work, condition.

The federal Fair Labor Standards Act (FLSA) does not limit the hours that may be worked by an employee. It merely requires that a nonexempt employee be compensated for whatever hours the employee works, including compensation at one and a half times the regular rate for any hours worked in excess of 40 in a week.

What counts as hours worked. There are a lot of rules to remember about what counts as hours worked and what doesn't.

• Employee absences: Employee absences due to illness, holidays, vacation, time off to vote, or similar causes can be ignored in figuring hours worked under the FLSA, even if the employee is paid for the absences. Whether you have to pay an employee for that time depends upon the policies and rules you've set up (and, in some cases, the state where you live).
• Meals and breaks: Generally, you have to include as working time, and to pay employees for, breaks or rest periods that last no longer than 20 minutes. See our separate discussion of meals and breaks, including state break requirements.
• Multiple jobs: If the employers are independent of each other, separate treatment is allowed. If, however, the employers are interrelated, the total of the time worked for all the employers is the "hours worked" figure that must be used in computing the employee's pay for minimum wage and overtime purposes. Therefore, if you own more than one business and an employee works for more than one of your businesses, you have to total all of his or her time to figure out hours worked. Of course, the employee must be paid for the time worked for both employers.
• Working at home: If the employee does work at home, but you know nothing about it, you don't have to pay the employee for that work. If, however, you have reason to believe the employee is working at home, you have to pay the employee for that work.
• On-call time: Depending upon the circumstances, you may have to pay an employee for time on call. It comes down to how much control you have over the employee. If a nonexempt employee has to be available for a phone call and come in to work immediately, you have to pay that employee. But, generally, if the employee is free to do whatever the employee wants to do, you don't have to pay that employee. This is true even though you require the employee to carry a beeper.
• Orientation or training: Once the decision is made to hire an employee, any time spent on activities that you require, such as filling out additional forms, is considered part of working time, and the employee must be paid for that time. This is true even if you send them to a class before or after the work day or on a nonwork day. If you require it, you have to pay them. Compensation is not required for voluntary training. If, however, you tell an employee that a training class is optional but you cause the employee to feel that nonattendance will have an adverse effect on him or her, the training is not really voluntary, and you have to include that time as working time.
• Travel time: Time spent traveling during normal working hours must be compensated. Time spent commuting and time spent traveling from home to a train station or airport do not have to be compensated. If overnight travel is required, only a portion of that time requires compensation.
• Unauthorized overtime: If an employee works overtime that you didn't authorize, you will still have to pay the employee for that time and you still have to include it as working time, if you knew or had reason to know that the employee was performing the work. In other words, if you know an employee is working overtime that you didn't authorize, you have an affirmative duty to stop the employee from performing the work. You might want to consider having a policy to discipline employees who work unauthorized overtime to keep the practice from happening.

Incidental activities. After you've established your employee's workweek and determined what counts as compensable time, you need to determine which, if any, incidental activities are compensable.