Defining Compensable Time
Compensable time is any time during which an employee is "suffered or permitted" to work, for which they must be paid. This includes all hours worked, whether authorized in advance or not, and extends beyond just time clocked in.
The Fair Labor Standards Act establishes the standard: if an employer knows or has reason to believe work is being performed, that time is compensable.
The "Suffer or Permit" Standard
The FLSA uses surprisingly broad language. An employee is working if they are:
- Required to be working
- Allowed to work
- The employer knows they're working
- The employer should know they're working
This means even unauthorized work must be paid if the employer knew or should have known about it.
What Counts as Compensable Time
All Time "On the Clock"
Obviously, time from clock-in to clock-out is compensable. But many activities outside normal working hours also count:
Pre-Shift Activities
Activities before the official shift starts are compensable if they are:
- Required by the employer
- Necessary for the principal work activity
- Primarily for the employer's benefit
Examples:
- Putting on required uniforms or safety equipment on-site
- Attending required team meetings before shift
- Booting up computer systems
- Preparing workstations or equipment
- Pre-trip vehicle inspections (for drivers)
Post-Shift Activities
Work after clocking out is also compensable:
- Required cleanup or closing procedures
- Removing required gear
- Completing paperwork or reports
- Securing the facility
- Counting cash drawers
Training and Meetings
Attendance at lectures, meetings, or training is compensable unless ALL four of these conditions are met:
- Outside regular working hours
- Attendance is voluntary
- Not directly related to the employee's job
- No productive work performed
If even one condition isn't met, the time must be paid.
Waiting Time
Whether waiting time is compensable depends on the type:
- Engaged to wait: Employee must remain at workstation ready to work (compensable)
- Waiting to be engaged: Employee is off duty and free to leave (not compensable)
Examples:
- Firefighter at the station between calls: compensable
- Restaurant server during a slow period who must stay in uniform: compensable
- Employee who clocked out and is free to leave: not compensable
Travel Time
The rules for travel time are complex:
Home-to-Work Commute: Normally not compensable, even if longer than usual.
Travel During the Workday: Time spent traveling between work sites during working hours is compensable.
Special One-Day Assignments: Travel to another city and back in one day is compensable (minus normal commute time).
Overnight Travel: Regular working hours must be paid even if traveling. Outside regular hours, time is compensable if the employee is driving. Passenger time outside regular hours is generally not compensable.
On-Call Time
On-call time is compensable if restrictions are so severe that employees cannot use the time for personal purposes.
Meal Breaks
Meal periods of 30 minutes or more are not compensable if employees are completely relieved of duty. If they must remain available for work, the time is compensable.
Rest Breaks
Short breaks (typically 5-20 minutes) are compensable working time that cannot be deducted from hours worked.
Sleep Time
For employees on duty less than 24 hours, sleep time is compensable. For 24+ hour shifts, up to 8 hours can be excluded under certain conditions.
What's NOT Compensable Time
True Voluntary Time
Completely voluntary activities with no pressure from the employer:
- Optional social events outside work hours (truly voluntary)
- Choosing to arrive early to read the paper
- Staying late to finish work that could be completed the next day (if truly voluntary and not required)
Normal Commute
Ordinary home-to-work travel at the beginning and end of the day.
Charitable or Civic Activities
Volunteering for causes even if encouraged by the employer, as long as:
- Participation is truly voluntary
- The work is for a different organization
- No productive work for the employer occurs
De Minimis Time
Some activities are so brief they can be disregarded under the "de minimis" doctrine:
- A few minutes spent booting up a computer
- Brief periods of time that are administratively difficult to record
However, if these small amounts add up to significant time when aggregated, they must be compensated. Courts have increasingly narrowed the de minimis exception.
Off-the-Clock Work
A major source of FLSA violations is off-the-clock work. Common scenarios:
Checking Email After Hours
If non-exempt employees check work email from home in the evening, that time is compensable. Employers must either:
- Prohibit off-hours email checking
- Have a system for employees to report and be paid for this time
- Accept the risk of violations
Working Through Lunch
When employees work during an unpaid meal break, the break becomes compensable. This often happens when employees are interrupted to help customers or handle problems.
Pre-Opening and Post-Closing Activities
Retail and restaurant employees who arrive early to prep or stay late to close must be paid for this time, even if they haven't clocked in yet.
Taking Work Home
If employees take work home to complete, those hours are compensable regardless of whether they were authorized.
Employer Liability for Unauthorized Work
Here's the problematic reality: even when you explicitly forbid unauthorized work, if it happens and you know about it (or should know), you must pay for it.
The Proper Response
If an employee works unauthorized hours:
- Pay them for the time
- Discipline them for violating policy (if appropriate)
- Never refuse to pay for work actually performed
You cannot solve an authorization problem by refusing to pay. That converts a potential policy violation into a wage and hour violation.
Rounding Time
The FLSA allows time rounding (e.g., rounding to the nearest quarter hour) if:
- It's neutral over time
- It doesn't consistently benefit the employer
- The method is consistent
For example, rounding 7:53 AM to 8:00 AM is acceptable if you also round 8:07 AM to 8:00 AM.
However, always rounding down or consistently rounding in the employer's favor violates the FLSA.
Industry-Specific Compensable Time Issues
Healthcare
Nurses and healthcare workers often arrive early for their shifts, making reports and staying late to document. These activities are compensable.
Retail
Employees who open or close stores must be paid for all pre-opening and post-closing activities.
Food Service
Prep work before opening and cleanup after closing are compensable, even if employees prefer to clock in "officially" later.
Manufacturing
Time spent donning and doffing required safety equipment is generally compensable if done on-site.
Security
Time spent going through security screenings can be compensable depending on the type of screening and employer requirements.
Training Time Rules
Whether training is compensable depends on all four conditions being met:
- Outside Regular Hours: Training during normal shift hours is always compensable.
- Voluntary Attendance: If attendance is required or employees believe it's required, it's compensable.
- Not Job-Related: Training must be completely unrelated to the employee's current job. Skills training for current duties is always compensable.
- No Productive Work: If employees perform any productive work during training, it's all compensable.
Most employer-provided training fails one or more tests and must be paid.
Recording Compensable Time
Employers must maintain accurate records of all hours worked. This includes:
Time Clock Systems
Systems should capture:
- Clock-in and clock-out times
- Meal break start and end
- Any off-the-clock work
- Pre-shift and post-shift activities
Manager Corrections
When employees forget to clock in or out, managers may make corrections, but these should:
- Be based on actual time worked
- Include employee acknowledgment
- Be documented in the system
- Not systematically benefit the employer
Employee Reports
For work that occurs outside normal time tracking (like checking email at home), establish a system for employees to report this time.
Penalties for Failing to Pay Compensable Time
Treating compensable time as unpaid creates serious liability:
Back Wages
Employers must pay all unpaid wages owed.
Liquidated Damages
Employees may receive double their unpaid wages as damages.
Overtime Implications
Unpaid compensable time affects overtime calculations, potentially creating additional unpaid overtime.
Attorney's Fees
Employers typically must pay employees' legal fees in successful wage claims.
Department of Labor Penalties
Civil penalties can reach over $2,000 per violation for willful or repeated violations.
Best Practices for Managing Compensable Time
Clear Policies
Establish written policies addressing:
- When employees should clock in and out
- That all work must be on the clock
- Procedures for reporting off-the-clock work
- Prohibition against unauthorized work (but requirement to pay if it occurs)
Train Managers
Supervisors must understand:
- What activities are compensable
- That all work must be paid even if unauthorized
- How to identify off-the-clock work
- The importance of accurate time tracking
Effective Time Tracking
Use systems that:
- Make it easy for employees to record all time
- Capture pre-shift and post-shift activities
- Flag potential off-the-clock work
- Maintain detailed records
Regular Audits
Review time records regularly to identify:
- Patterns of off-the-clock work
- Employees consistently arriving early or leaving late
- Missed meal breaks
- Rounding issues
Address Problems Proactively
If you discover compensable time wasn't paid:
- Correct it immediately
- Pay back wages owed
- Fix the underlying cause
- Don't wait for employees to complain
Creating Boundaries
To minimize off-the-clock work:
Technology Policies
- Prohibit checking email outside work hours
- Restrict access to work systems during off-hours
- Make clear that non-exempt employees should not work from home
Workload Management
If employees regularly work beyond scheduled hours, you may have a staffing problem. Either:
- Hire additional help
- Adjust expectations
- Authorize and pay for the overtime
Cultural Change
Some employees feel pressure to work off the clock even without explicit requirements. Leadership should emphasize:
- All work must be on the clock
- Employees should not sacrifice pay to meet deadlines
- Off-the-clock work is not appreciated or rewarded
The concept of compensable time extends far beyond punching a time clock. Any activity that primarily benefits the employer and occurs at their direction (or with their knowledge) is compensable. The best protection is accurate time tracking, clear policies, manager training, and a culture that values paying employees fairly for all time actually worked.
