Delivering for Best-in-Class Wholesaler-Distributors
July 2011

Are your employees using their company-provided or personal BlackBerry, iPhone or other personal digital assistants (PDA’s) to check and send business-related emails during non-office hours?  If these workers are nonexempt employees, the wholesaler-distributor may be exposed to claims for overtime pay for this off-hours work.

Under the Federal Labor Standards Act (FLSA), unless an employee is “exempt,” the worker must be paid overtime (at least time-and-a-half the regular hourly rate) for time worked more than 40 hours in a workweek.  Exempt employees are generally salaried workers who qualify under Labor Department regulations as a bona-fide executive, administrative, professional, computer or outside sales personnel.  (See Department of Labor regulations, 29 CFR Part 541).  An employee’s job title or status as a salaried worker is not determinative of whether he or she is “exempt.”  The regulations require an analysis of the employee’s pay level and the primary duties actually performed by the worker in order to qualify as an exempt worker.  All other workers are “nonexempt,” and thus must receive overtime pay for hours worked in excess of 40 per work week.

Several class action lawsuits have been brought under the FLSA against employers who issued PDAs to their nonexempt employees and expected, or permitted, the employees to respond to business-related emails and calls outside of normal business hours.  The suits contend that the employees should be receiving overtime pay for the time spent responding to the emails and calls during off-hours.  The cases are pending.

Even nominal use of a PDA during off-hours can add up to several hours or more per week. In a class action case—where a potentially large group of similarly situated employees are involved—the monetary exposure can be substantial.  Each employee in the class may recover two-times the amount of unpaid overtime pay, plus recover his or her attorneys fees and litigation costs.

Employer Policies

To limit this exposure, the wholesaler-distributor can issue a PDA only to exempt workers and have a policy that nonexempt workers are not expected or permitted to respond to business-related emails from any device during non-business hours.  If it is essential to equip a nonexempt employee with a PDA, then the employer needs to establish rules as to their off-hours use, e.g., use is prohibited, or to be used only with express authorization, or to be used only under certain circumstances.

Finally, whatever the policy, the wholesaler-distributor should require its nonexempt employees to track and record all time spent using any PDA or other device for work purposes during off-hours.  Requiring a nonexempt employee to keep contemporaneous time records and regularly provide the recorded time to the wholesaler-distributor will help control overtime and limit exposure to substantial claims for overtime pay.