What Does the FLSA Mean by “Hours Worked”?

Your business is likely subject to the Fair Labor Standards Act (FLSA), which requires covered employers to pay employees for all hours worked. But what exactly are “hours worked?” While this may seem self-explanatory, “hours worked” has numerous layers influencing compliance.

What are hours worked?

The United States Department of Labor says, “In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work. Also included is any additional time the employee is allowed (i.e., suffered or permitted) to work.” In other words, the employee must be paid for all time spent working, or all time they’re required to be on duty, regardless of whether they work remotely or at the job site. Note that this definition is specific to the FLSA. States may have their own definitions of what constitutes “hours worked” under state law.

The many variants of hours worked

FLSA “hours worked” comes in various forms, including those listed below.

“Suffered or permitted” to work

The DOL explains, “Suffer or permit to work means that if an employer requires or allows employees to work they are employed and the time spent is probably hours worked.” Generally, if you know or have reason to believe that the employee performed work for the benefit of your company, then you must pay them for the time spent working — even if you did not authorize them to do the work. For example, an onsite employee who takes work home to finish up later in the evening or on the weekend should be compensated for the time spent working on these tasks. Furthermore, a remote employee may be entitled to compensation for time spent responding to work emails from home, accessing the company network, or performing additional work.

Waiting time

If the employee is “engaged to wait,” then they are on duty and should be paid for the time spent waiting. For instance, the employee is “engaged to wait” if they are reading a book while waiting for something work-related to happen. But if they are “waiting to be engaged,” then they are off-duty and do not have to be paid for time spent waiting.

Meetings and training time

Time spent in training or meetings is hours worked, except when the training or meeting:

• Is not job related;
• Is voluntary;
• Occurs outside of normal work hours; and
• Does not have the employee performing any productive work

Rest breaks and meal periods

These are not required by the FLSA. But if you offer short rest breaks — which typically last around 5 to 20 minutes — the time must be counted as hours worked. If the employee takes longer than the authorized rest break, you do not have to pay them for the extra time taken. Meal periods — which usually last 30 minutes or more — do not need to be paid if the employee is completely relieved of their duties. If the employee performs any work (whether actively or inactively) during their meal period, then they are not fully relieved and must be paid for the meal period.

On-call time

If the employee is not able to use their time freely while on call, then they are on duty and should be paid for on-call time.

Travel time

Travel time is generally considered “hours worked” if it’s part of the employee’s principal activity — meaning the work you hired them to perform. For example, the following types of travel are compensable:

• Commuting to different worksites during the workday
• Any driving that you (the employer) requires
• Job-related travel to a different city during regular work hours

Note that you do not have to pay employees for ordinary home to work travel.

COVID-19 implications

Due to the COVID-19 pandemic, employees are working from home in record numbers, and many employers plan to stick with this trend or at least a hybrid model. Now more than ever, it’s important to know what’s regarded as “hours worked” for home-based employees. For example, a home-based employee who is required to visit the worksite from time to time for meetings should be paid for time spent traveling to these meetings. Also, if you require your employees to take a COVID-19 test, you must pay them for time spent waiting to receive the test plus time spent undergoing the test during regular work hours.

Tracking hours worked

Nonexempt employees

As an FLSA-covered employer, you’re required to keep certain records for nonexempt employees, including their hours worked each day and each workweek. While you can use whatever timekeeping system you choose, the simplest, most accurate, and least time-consuming method is an integrated time and scheduling platform that enables employees to clock in and out from anywhere. To help ensure accurate time tracking, educate your employees on:

• What’s considered “hours worked”
• The significance of recording all of their hours worked
• Who to contact for clarification on hours worked

Exempt employees

The FLSA does not require you to track hours worked for exempt employees who are subject to the FLSA’s salary basis rule, because they are not paid according to hours worked. These employees must receive their full salary for any workweek in which they perform any work, unless there’s a legally permissible deduction. That said, you can require exempt employees to work a specific number of hours per week and you can choose to track their work hours. You may, for example, choose to track exempt employees’ hours for attendance, PTO, or Family Medical and Leave Act purposes.

Calculating hours worked

Federal minimum wage

Generally, the FLSA mandates covered employers to pay all hours worked in a workweek at no less than the federal minimum wage (currently, $7.25/hour) — regardless of whether the employee is paid on an hourly, daily, or piece rate basis. In limited cases, an employee can be paid at less than the minimum wage.

Overtime pay

Under the FLSA, nonexempt employees must receive overtime pay (at 1.5 times their regular rate of pay) for work hours exceeding 40 in a workweek. You must include all hours worked (as defined by the FLSA) in the employee’s total weekly hours when calculating overtime pay. Hours not worked, such as holiday or vacation time, should be excluded from overtime calculations.

Rounding hours worked

FLSA regulations permit employers to round employees’ time when determining hours worked. According to the DOL, you can round employees’ start and end times to the nearest 5 minutes, 1/10th of an hour, 1/4 of an hour, or 1/2 hour “as long as the rounding averages out so that the employees are compensated for all the time they actually worked.” You can eliminate rounding errors by using an automated time and labor system that integrates with payroll. For more details on hours worked under federal law, see the DOL’s FLSA Hours Worked Advisor.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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