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Do New Overtime Rules Make Telework Too Risky? Telework is becoming increasingly popular with employees, but new overtime rules may lead employers to rethink offering these options.

By Matt Straz

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.


Flexible working options and telecommuting are becoming increasingly popular with employees. In fact, 30 percent of more than 2,600 respondents to a 2015 FlexJobs survey said they would take a 10 or even 20 percent cut in pay for flexible work options. And employers are listening.

According to data released in January from GlobalWorkplaceAnalytics.com, regular work-at-home has grown by 103 percent since 2005. Approximately 20 to 25 percent of the workforce teleworks at some frequency and 3.7 million U.S. employees now work from home at least half of the time.

But just as telework starts to pick up speed, employers may rethink flexible options. Why? New overtime rules.

The finalized rules, which were just released last week, will raise the salary to $47,476 for employees to be exempt from overtime pay. That means employees who are currently exempt from overtime pay who earn less than this threshold will become nonexempt -- employers will suddenly be required to pay overtime to over four million more employees within the first year of implementing the new rules.

So what do the new overtime rules have to do with telework? Well, it makes flexible work environments riskier and more complicated for employers. Here's how:

Monitoring time is more important…

Flexible work arrangements and the proposed overtime rule are at odds. While telework and other arrangements focus on the work employees accomplish rather than the time they put in, the new overtime rules make time a lot more important in the eyes of the law.

Employees who work outside of the office and who set their own schedule may work atypical hours depending on their workload and lifestyle. And, as long as employees are completing their work and meeting deadlines, employers may not closely monitor their hours. But if flexible workers are now nonexempt, monitoring their time is critical.

Now it's the employer's responsibility to track their hours and make sure they are accurately compensated for their time.

…and riskier.

But monitoring employee time isn't simple, and it can be risky for employers. Who's to stop an employee from checking their email before bed? Before they know it, they've spent more time than they intended updating a proposal or crafting a response to a client. Employees who are used to working whenever they want may not even realize they are working overtime. And that could leave employers open to compliance issues.

Without clear and accurate time monitoring, there's also the risk that employees can claim they worked unreported overtime hours. This risk alone may lead employers to end flexible work arrangements. But is that really necessary? Will telework become too risky for employers? It doesn't need to.

The new overtime rules will definitely change teleworking -- but it shouldn't end flexible options. Working habits, policies and expectations will need to adapt to keep employers compliant and employees happy. Here's how:

Related: Should You Pay Employees an Hourly Wage or a Salary?

Give flexibility more structure.

Although it sounds counterintuitive, flexible arrangements will need more structure in the wake of the new overtime rules. Clearly define what telework means at the organization and update policies to be more specific.

Consider setting scheduled hours employees must work, but allow them to choose their working location. Or, work with individual employees to set schedules that work for them -- maybe they work four 10-hour days or start at different times on Mondays and Wednesdays etc. Whatever the arrangement is, make sure it's clear and that employees know when they should and shouldn't be working.

Related: Here's How the New Overtime Rules Will Affect Entrepreneurs

Update time tracking policies.

Once schedules are clear, set policies on how employees should track their time, including who they should report their hours to and how often they need to do so.

Fortunately, technology can make this process easier for employers and their employees. HR software can easily be used to keep track and remind employees of their working schedules while helping managers keep flexible schedules straight. Other apps can also easily monitor employee time with virtual clocking in and out.

Whatever the process is, make sure all nonexempt employees know how they need to track and report all of their time worked. Stress the importance of accurately tracking time so they can be paid fairly and flexible working arrangements continue to work smoothly.

Related: Do You Have a Plan to Survive the Proposed Overtime Rules?

Note for Editor: Any questions or comments on this post, please email crpr@comerecommended.com.

Matt Straz

Founder and CEO of Namely

Matt Straz is the founder and CEO of Namely, the HR and payroll platform for the world's most exciting companies.

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