Sales & Management: When is Business Travel Considered “Work Time ” Under the New Overtime Rules?
 
March 1st, 2005

 

Part Two [For more information on what constitutes “nonexempt” versus “exempt” employees, see Part I of this article in the 2005 January/February issue of TileDealer.]

By Naomi R. Angel, Esq.
March-April 2005

The Department of Labor issued new regulations governing overtime pay on August 23, 2004. The new regulations were intended to bring more clarity to determinations of those entitled to overtime and those who are not. If exempt and nonexempt employees work in the office beyond regular hours to compile materials for sales presentations, once the time actually worked exceeds 40 hours that week, the nonexempt employee is entitled to overtime pay at time-and-a-half of base pay; the exempt employee is not. This situation is common and well understood.

What about out of town travel time?

We travel to Coverings, training sessions, educational conferences, out-of-town employer-required meetings, etc. And what about those extra out of the office hours to get ready for and attend sales meetings and conventions, training meetings, trade shows and other such events? What’s actual working time and what’s not?

The nonexempt employee travels from Chicago to California to attend a meeting or trade show. If the employee is staying overnight in another city, travel occurring during normal working hours, e.g., 8:30 AM to 5:00 PM, regardless of the day of the week, is considered time worked. Compensable work time would commence when the employee reached the airport (or other transportation vendor site) during regular working hours. Time worked on site out of town and travel back during normal working hours would be added to the work week computation. Travel time after regular working hours on overnight trips is not compensable.

A different rule applies when all of the travel occurs on one day. For example, if the employee were to leave Chicago at 6:00 AM and travel to a meeting at an airport hotel in the D.C. area and return at 7:00 PM the same day, all of the hours would be work time.

If the employee drives rather than flies to an out of town meeting, the same travel time considerations apply for overnight and same-day travel. One exception to all of these examples is that any time spent working while traveling is compensable work time.

Local travel considerations

Now our nonexempt employee attends a local meeting out of the office. Travel time from home to the meeting site, e.g., a hotel, would be regarded as non-compensable commuting time until it exceeded the employee’s normal commuting time to the office. If the employee went to the office first to pick up materials for the meeting, or went to the hotel after part or all of the day at the office, travel time from the office to the hotel would be work time.

While the nonexempt employee is at the out of town event, work time there would be included in the work week calculation. Employees often start their day at an early morning staff meeting to plan the day’s events. The work day would commence at the meeting. All of the time on site during the work day and evening when the employee was required to be in attendance at business functions would constitute work time.

What about “bank time”?

“Bank time” or paid time off to compensate the employee for time worked out of the office including travel, or days away from home, or on weekends, as well as overtime getting ready for or during an event, is a common, popular and mostly illegal practice if used in lieu of paying overtime. Federal law requires that overtime be paid in the same pay period in which it is earned. Therefore, bank time used to offset overtime hours must be used in the pay period in which the overtime was accrued, and provided at the rate of time-and-a-half for each overtime hour. “Banking time” derived from overtime hours for use at some future date is against federal law.

Employers may, as a matter of policy, decide to permit exempt and nonexempt employees who travel away from home or work weekends to take days off or to provide other benefits to recognize the extra efforts that go into conventions and meetings. That is a matter of policy, but it is not mandated by federal or state law, and may not be used in lieu of overtime pay to nonexempt employees.

What are employers required to do for exempt employees?

The old and new rules do not require employers to pay overtime to exempt employees for work beyond the 40 hour week limit, or to pay travel time, or to provide compensatory time off. Nothing has changed in that regard.

Audit your workplace. Keep these key distinctions for exempt versus nonexempt employees in mind when determining compensation obligations and you should stay out of trouble. For more detailed explanations of the revised overtime rules see the U.S. Department of Labor website at www.dol.gov.

There are other specialized exempt categories outside the scope of these articles, including outside salespersons, highly compensated computer systems analysts, programmers, software engineers, and similar technical personnel. Special rules apply for them. There are other job classifications which historically or by court decisions are regarded as nonexempt, including police, firefighters and other “first responders,” and the revised rules specifically state all of these classifications remain nonexempt. These are also outside the scope of these articles.

ii Under the Fair Labor Standards Act (FLSA), travel time is “actually worked” when it occurs on weekdays or during normal working hours on weekends. Many state laws expand this rule to require that all travel time, regardless of the time of the travel, be counted. Check with your attorney for your state requirements.

Naomi Angel serves as legal counsel to industry trade associations and is a partner at Howe & Hutton, Ltd., Chicago, IL. She can be reached at (312) 263-3001 or nra@howehutton.com.

This article is provided solely for informational purposes and does not constitute legal advice. If you have specific questions or concerns about a legal issue, consult your company’s legal counsel for guidance.

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