Are Companies Complying with Work Rules During COVID-19? BRG Asked the Employees
BRG Managing Director Elizabeth Arnold joins Michael Whalen to talk about how COVID-19 has changed the workplace environment and how well employees are complying with the employment law for remote workers.
Ms. Arnold discusses an empirical study conducted recently by BRG Labor and Employment experts to examine hourly employees’ compliance with applicable wage and hour laws in a remote work environment.
TRANSCRIPT
MW 00:09 [music] Welcome to BRG's ThinkSet Podcast. I'm your host, Michael Whalen. BRG is a global consulting firm. We help organizations in disputes and investigations, corporate finance, and performance improvement and advisory. We're multidisciplined group of experts, industry leaders, academics, data scientists, and professionals. Around the world, BRG delivers the inspired insights and practical strengths our clients need to stay ahead of what's next. For more information about BRG, please visit thinkbrg.com.
In this episode of the ThinkSet Podcast, we're talking about how well employers are complying with the employment law for remote workers and how BRG decided to look at that question by asking employees. COVID-19 has disrupted usual workplace practices, forcing many employers to institute remote work for employees. But this change didn't just affect salaried employees, who may be used to working flexible schedules and at remote locations. How much of a potential compliance problem is this?
Today, we're joined by Elizabeth Arnold. Elizabeth is a director in BRG's Labor and Employment practice, normally based in our Emeryville, California, office. She's an expert in wage and hour employment practices, a researcher into organizations of various sizes, and an adviser to clients on employment issues for nearly two decades. Elizabeth, welcome to the ThinkSet podcast.
EA 01:36 Hi, Michael. Thanks. Great to be here.
MW 01:38 So I said you were normally based in our Emeryville, California, office. Since we're talking about remote work, where have you been based during the COVID insurgence?
EA 01:47 Across the bay in San Francisco.
MW 01:49 So you're in the heart of high tech. And high tech, I thought had been at the forefront of remote work. So was high tech prepared for it?
EA 01:58 By definition, the technology company is certainly in a much better position, because it's, in fact, technology that is the tool that's facilitating the remote work. These sophisticated tech companies already have people that may remotely work from home sometimes. Maybe not permanently or all the time, but there was already an element to that. I think they already had. Importantly, they already had the systems and structures in place to manage a lot of remote work. However, I will say that there's a big difference in the remote work compliance issues around the salary exempt employees versus the hourly employees.
MW 02:36 Define what you mean by that, Elizabeth. What is the difference? How are salaried employees treated differently from those who punch the clock?
EA 02:45 The salary employees do not need to record their work time. So that gives them a lot more flexibility in terms of starting and stopping work, in terms of where they work. It's really focused on the content, and kind of what they're getting done as opposed to the hours they're putting in. So the driver of their compensation is really content driven as opposed to time. Typically, it's the higher-level-salary positions that have the flexibility and had the preexisting work-from-home arrangements. The kind of bigger issue is the hourly employees who are not set up to work from home.
MW 03:20 Did many companies have systems and procedures set up to allow nonexempt employees engaged in remote work?
EA 03:27 Some business is dead. I know, particularly, for example, call centers. I've worked with clients that have a portion of their workforce already working from home, and they're set up with systems in place, and that's their permanent work environment. So they were certainly already set up, but a lot of hourly employees are in industries that unfortunately don't translate to working from home. So it's really only a portion of the hourly workforce that has the option of working remotely. Jobs like the service sector, retail, food services, all of those industries don't have the option to work remotely.
MW 04:06 What is the biggest process challenge associated with nonexempt hourly employees working from home?
EA 04:12 In a typical workplace, hourly employees will have a physical time clock. Of course, there are variations to that. Some people use their cellphone to clock in, or a mobile device. But a lot of businesses still have a physical time clock on site where they will either swipe a card, or a thumb print, or some code to indicate that they've started work. Now, obviously, they can't take those physical time clocks and bring them home. So the challenge is to set up a system or get them used to using something that's basically a computer or electronic based from home.
So it's a completely new concept for a lot of these workers. And it's not something that is in the scope of their natural workflow. So as a consequence, companies needed to roll out a whole new set of procedures and training and rules, and that's where, I think, given the fact that there was very little notice provided, the challenges came in. Businesses really had to scramble to put this together. And that's where there may be some room for improvement, which was shown in our study, which I'll talk about in a few minutes. But some employees struggled with that.
MW 05:25 And have government labor regulators expressed any concerns?
EA 05:28 There is, or there has been, an acknowledgment by the Department of Labor, that businesses are struggling with these kinds of systems. In fact, they issued a Field Assistance Bulletin—they call it—in August.
MW 05:42 They in this case is who?
EA 05:43 The Department of Labor.
MW 05:45 This is the federal Department of Labor?
EA 05:46 Yes. So that's important. So that's a federal agency. Now, I won't get into all of the states have their own, have some unique requirements, etc. But at the federal level, the Department of Labor actually issued a bulletin reminding employers that you do need to record time. And acknowledging the fact that because people are working from home, there may be some start and stop, some interruptions, etc. Acknowledging that and reminding everyone that they still need to comply with this requirement.
MW 06:19 So what's the risk here for employers? I mean, what happens if they don't comply?
EA 06:23 So if they don't comply, I think, well, there's twofold. From the employee perspective, obviously, they're not reporting all their time properly. They're probably not getting paid appropriately. So that has a major impact.
From the employer perspective, there's a high risk of litigation. The litigation in this area, which is commonly bucketed into the off-the-clock-work area, there are millions of dollars’ worth of lawsuits and litigation in this area, frequently. So in an in-person workplace, it may include things like security checks, bag checks, alarms, walking time, waiting time, all of that kind of filler activities that occur on site. This is kind of somewhat of a new area that employers are facing within the realm of off-the-clock claims. In summary, there is a high risk of litigation. And it's very expensive and costly for employers if they face litigation in this area.
MW 07:31 So it sounds like compliance is pretty necessary as a preventative measure to avoid these downside risks you've described. How well is it been working?
EA 07:40 As far as I know, most of the research in this area has been focused on employers and what they're actually doing, what systems they're putting in place. But what is interesting is that, really, it's about what the employees are doing. So it's not about—it's not all about just the systems that are put in place. Certainly, that's important, but it's more about what the employees are actually doing.
We actually decided that it would be beneficial to understand a little bit more about what employees are actually doing when they're working at home. What do they think of the timekeeping systems? Are they using them? Are they entering their time appropriately? What are they including as compensable or actual work time versus not? So that actually is what motivated us to conduct a study of hourly employees working remotely during COVID.
MW 08:34 So how did you find out what employees were doing? Did BRG put up a Twitter poll or a Facebook survey?
EA 08:39 No. Actually, my colleague and coauthor of this study, Dr. Chester Hanvey, and I conducted this research with a high level of scientific rigor—what you would expect in an academic publication. And we certainly leveraged existing research and best practices in social science, which resulted in us collecting data from over eight hundred employees—hourly employees—working remotely across the country. So we had a great cross-section and great participation in the survey, which I think adds to, certainly, the credibility of the findings and makes them more relevant to a larger group of employers.
MW 09:20 And these were diversified industries as well? This wasn't any concentrated in any particular sector? You already said it was geographically diverse, but both size of company and nature of industries?
EA 09:29 Yes. Yes, absolutely. So, good point. We had individuals across various industries, but there's quite a range. We were very pleased with the cross-section by a variety of demographic factors, including geography, industry, gender, age. We had quite a diverse sample.
MW 09:49 And do you have a certain concentrations? Because, I think, as you mentioned previously, there were only a certain number of hourly workers who really can undertake remote work.
EA 09:59 Yes. That's a really important point. So really our study is a subsection of the hourly group of employees, or the hourly segment of workers in the US. Only a subsection can actually translate their work into remote. Only a subsection can really work remotely effectively. So this study does not represent, or does not include, a lot of employees as you described.
MW 10:27 And what did you find?
EA 10:28 Interestingly, we included just going back to looking at—or thinking through from our experience—what are likely to be the factors that are most likely to be drivers, and we identified four key factors. So that includes company policy clarity, which is really how clear are the policies, how clearly are they written, and how clearly can it be understood by employees.
The supervisor's communication ability. We all know that the majority of communication that gets down to employees comes from their supervisor or direct supervisor. So we felt that their ability to communicate would likely be related to compliance.
The third key factor was the usability of the timekeeping system. Historically, we've seen that there can be some complexities in accessing different timekeeping systems. Depending on whether they're built into an HRIS system or whether they're a standalone, whether they're required going through an intranet. There are a range of ways that you can access time-clock systems. And we thought that there may be some that are a bit too challenging for folks that may not be used to this kind of system. We call that kind of usability. So the usability of the timekeeping system.
And then lastly, we recognize that there's a certain element of individual personality here. And so, we defined that factor as self-discipline. And we focused our research around questions, around these four areas.
MW 12:09 So those were your hypotheses? The factors having the biggest impact?
EA 12:13 Yes. So the survey was lengthy. It wasn't a quick Facebook poll. It was a substantive questionnaire survey that asked a lot of questions about these topics. And what we found is that two factors were significantly related to compliance. And those were policy clarity, which had a strong impact on whether employees reported certain activities as compensable. So as I said earlier, there are some activities that should be considered on-the-clock work, but there is some confusion out there about that. And what should be included as compensable work time.
And self-discipline was the second one. So going back to that personality factor, employees with higher levels of self-discipline, we found, are more likely to report their time more precisely at the beginning and end of the workday.
So the other factors—while we did not find that they were related to compliance, we did find some other interesting information about employee behavior while working remotely. So a couple of things. We found that the common concern that you hear about employers is concern about removing people from the workplace and causing a strain on communication. Causing a strain on the individual's connectedness and awareness and investment in their jobs. But we found in our research that actually many or the majority of employees were satisfied with the level of communication that they were receiving when working remotely. And in digging into this a little bit more, there is actually other research out there that shows similar results. Employees are not finding that there is a decrease in communication, which is particularly interesting, I think.
MW 14:08 Is that an indictment of the level of communication that occurred pre-COVID?
EA 14:13 Right. Yeah, I don't know. But I think one theory that I've read is that, because everyone recognizes that there is no water cooler talk and that there is no in-person meeting time, everyone makes more of a deliberate effort to make sure that they connect. And so, they are more likely to have defined checki-ns and defined meeting periods. And that meetings are potentially more focused. And there's not as much, kind of, small talk. And I think, in a way, that increases the efficiency, perhaps, and increases everyone's satisfaction with communication.
Just to be a little more specific, we found that nearly half of the respondents felt that their communication with their supervisor was at the same level of frequency as it was when they were working in person. And then 25 percent said that they were actually communicating more with their supervisors when they were working remotely. Again, circling back to that school of thought around making deliberate efforts to communicate, I think makes sense here. We also found that 80 percent of participants reported that their supervisors were good listeners, were responsive, [were] easy to talk to, and expressed their ideas clearly. That was not really what we expected. So I think that's very interesting. And more than 75 percent of respondents feel that their companies’ communications regarding remote timekeeping policies have been clear. So that is also interesting, given the rapid switch from in-person to remote work. We were not expecting that finding either.
MW 15:50 So when you say the respondents felt that company's communication on timekeeping policies was clear, but at the same time you found that the clarity of policies had a significant impact on whether employees were actually reporting compensable activities and legitimate work time, does that mean—in other words, they were clear but wrong?
EA 16:11 Exactly. So, unfortunately, emphasizing the positive, they did report that they were pleased and satisfied with communications. But unfortunately, some of the details, I think, along the way could use improvement. Specifically, there was a bit of confusion around what activities are actually compensable or should be included in work time.
MW 16:34 So where does that confusion lie? What are employers and employees confused about?
EA 16:37 So there are a couple of activities that are quite common. And this is actually—it comes up for hourly employees that work on site as well. It's going back to the technology. On the one hand, it enables us to communicate very easily with mobile phones and email. But on the other hand, it's nonstop and doesn't necessarily stick to defined work hours. So what we found is that nearly 70 percent of respondents indicated that they were making or receiving work-related calls, text messages, reading and sending email before or after their workday. And then 25 percent said that they never, or only sometimes, record time they spend on these activities as work time. This is even harder, I think, to manage when they're working remotely. So it's happening perhaps off hours: morning, evening. And then there's confusion about including it in their work hours.
MW 17:38 You talked a little bit about timekeeping systems. And have there been improvements in that area?
EA 17:45 So there have. Our hypothesis, as I mentioned previously, was that the usability of the timekeeping system would have a major impact. But, in fact, we found that very few people had issues with the time-clock usability itself. So they all felt like they could use it effectively. They didn't report any problems. So I think the confusion is just about what to include in their work hours, not about a system that's somehow inadequate or not allowing them to report the time. It's just confusion about what should be included.
MW 18:16 What are some other examples of working off the clock?
EA 18:19 Well, I think the big ones—I already mentioned really—are the text messages. Text messages and email on your mobile phone, that's kind of something that we're all faced with.
MW 18:30 Now, I've managed a remote or a mixed workforce of remote workers and in-office workers before. And one of the things, I guess, I can appreciate is when supervisors are dealing with employees who were physically present, and a cadre of employees who were working remote. The remote workers may not feel they were getting as much communication. It takes a considerable effort of a supervisor to make sure that they're maintaining the same degree of communication and supervisory interaction with remote workers as they would be their in-office workforce. But I guess if there's an upside to, as you said earlier, COVID-19, everybody was on the same footing.
EA 19:21 Right. That's true. But, I think, as what I've heard, some workplaces that were reopening at one point were staggering the return, or only allowing a certain percentage at certain times, that could mirror the scenario you just described. But, I think, what would come into play there would be, as I mentioned earlier, circling back, that the fact that working remotely, people make more of a defined or definitive effort to make sure that they connect. And the supervisors play a big part in that too. But I think employees as well have recognized that they need to ensure that that happens. It does put more strain on supervisors though, I think, as I'm sure you may have experienced.
MW 20:03 So what should employers do, now armed with the information from your survey? In addition to giving you a call for assistance.
EA 20:12 Yes.
MW 20:12 How should they proceed to improve their compliance with wage-and-hour requirements?
EA 20:19 I think, as I said initially, this is a great opportunity for employers to check in, given that we believe that this is going to continue for quite a while, on this remote-work concept. This is a good opportunity to check in on their remote-work policies. And not just at a high level, making sure that they're compliant with the law from a policy perspective. But also making sure that there is enough level of detail in the policies to guide employees as to what they should and should not be including in their work hours.
So, as I mentioned, there are some common areas that are left off work hours that are reported. I think employers would be wise to specifically articulate those activities in their policies. Even maybe provide examples of a worker who is doing specific activities, and then perhaps stops work, and then picks back up again later. Providing examples as to how that time should be recorded and reported, I think, would really help everyone. So I definitely recommend taking those steps now to ensure that compliance continues.
MW 21:40 Elizabeth Arnold, thank you for joining us. And we appreciate hearing about the BRG survey, and the important information for employers knowing exactly whether their employees are complying with hourly wage rules. Thanks very much.
EA 21:56 Thanks very much, Michael.
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MW 21:59 This ThinkSet podcast is brought to you by BRG. You can subscribe to the podcast and access other content from ThinkSet magazine by going to thinksetmag.com. Don't forget to rate and review the show in iTunes as well. I'm Michael Whalen. Thanks for listening.
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The views and opinions expressed in this podcast are those of the participants and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group or its other employees and affiliates.