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Overtime Rules For Employees Who Work From Home

Working from home is the new reality for millions of employees across America, and it might be a while till the entire workforce will be able to get back to the office. More than a third of workers who used to commute are now working from home, according a recent survey.

Among the many new challenges SMB leaders face is keeping track of the hours their employees work at home and understanding what mandatory WFH policies mean for calculating overtime.

Read 5 Ways to Make Remote Work Successful.

Exempt Employees

If you only have exempt employees, relax—the rules for exempt employees are unchanged. As a reminder, that requires:

  • For most exempt categories, a minimum salary of $684 per week or $35,568 annually
  • Highly compensated employees must earn a minimum of $684 per week and $107,432 annually
  • Nondiscretionary bonuses and incentive payments can make up 10% of these amounts(For more details, read our New DOL Overtime Rules: FAQs)

If an employee was exempt while working at the office, they’ll still be exempt now and so businesses don’t need to calculate the number of hours they work. However, moving to remote work can be a challenge for anyone. Managers and HR leaders should make expectations clear.

Inform employees of best practices for working from home and encourage them to set their own boundaries to encourage work-life balance (like actually unplugging at the end of the day). Increased productivity is great, but long term these sorts of behaviors put employees at risk of burnout.

Non-Exempt Employees

The good news, the rules also stay the same: the Department of Labor demands that non-exempt employees must be paid an overtime rate at least 1.5x their regular rate for any hours worked in excess of 40 hours per week—wherever an employee works. Remember to also be aware of any state-specific overtime laws.

However, things get a lot more challenging when calculating overtime for non-exempt employees who work from home. In the workplace, it can be relatively easy to track who is working and when (though work completed during an employee’s commute, which should be counted, is a common source of confusion). How should it work for remote employees?

Sticking to Work Schedules

Just like exempt employees, non-exempt workers might find it tricky to separate professional and personal life when working from home. However, there can be no “grey areas” allowed—either work is tracked (and compensated) or it isn’t.

The easiest way to ensure this is for employees to work their regularly scheduled hours, or as close to it as possible. Employers should be clear about whether employees are allowed to work overtime, and how much. If employees work overtime despite being instructed not to, they must still be compensated—but this can be grounds for termination.

Tracking Working Time

The simplest way to track the hours employees work is to use a software solution. Employees can log in and out—or rather, clock in and out. Have employees sign an agreement acknowledging that they will only work when clocked in and that they will clock out for meal times and any other breaks.

Ideally, this will be part of a company-wide WFH policy. Employers should remember that mandatory breaks and rest times don’t just apply in the workplace—they must be included wherever employees work.

How Paycor Can Help

Paycor Time & Attendance allows employees to clock in and out through a web-based solution or Paycor Mobile. SMBs leaders can track overtime and collect reliable timesheets for payroll. To learn more, talk a member of our sales team.