Employers subject to the FLSA are required to maintain records of the hours worked for non-exempt employees, there is no such requirement to maintain records of hours worked for exempt employees. However, a huge danger to employers is that they may misclassify an employee as exempt and not keep time records, only to find that the Department of Labor (“DOL”) may rule that the employee was not exempt. If an employer has no contemporaneous time records, then it is extremely difficult to rebut claims by an employee about overtime worked. The employee does not have to have formal records, but needs only to establish “a reasonable inference” of hours worked. The employee may do this solely based on the employee’s credible testimony. Even an approximation of hours worked may be a basis for a damages award.

Teleworking poses real challenges in this regard. As a workplace too, teleworking is often a good idea, for employers and employees. However, significant dangers exist under the Fair Labor Standards Act “(FLSA”) if a telecommuting employee is misclassified as exempt. Telecommuting exempt employees are likely not directly supervised. The DOL has taken a particular interest in preventing possible employer abuses of teleworkers, and indeed created a smartphone application to help employees track hours worked and therefore the wages they are owed under the FLSA.

Before allowing employees to telecommute, employers should conduct a careful audit of exempt and non-exempt positions. Since the employee’s burden to prove hours worked in FLSA litigation is easy to meet, a proactive approach by the employer is the best way to ensure appropriate records are kept. Employers should also investigate the “homeworker exception” of the FLSA, addressed in 29 C.F.R. § 785.23, by consulting legal counsel. This regulation deals with the difficulty of tracking hours worked for telecommuting employees and in some cases allows the employer and employee to create a reasonable agreement regarding tracking hours worked at home. Such agreements should be carefully drafted with the help of a lawyer.