Off the Clock, Out of Compliance? Managing Wage-and-Hour Risk in Remote Workforces

The shift to remote and hybrid work arrangements has fundamentally changed how employers manage (and potentially mismanage) wage-and-hour compliance. While flexible work models offer significant benefits, they also present unique challenges under the Fair Labor Standards Act (FLSA) and analogous state laws.

Wage-and-hour claims remain one of the most frequently litigated employment issues, and remote work has created new avenues for liability, particularly with respect to timekeeping, overtime, and off-the-clock work.

Below are some key compliance risks that employers should be addressing now, along with practical strategies to mitigate exposure.

Tracking Hours Worked

Non-exempt employees must be paid for all hours worked, including time that may be difficult to capture in a remote setting. Even small increments of unrecorded time can lead to significant liability when aggregated across a workforce. Without direct supervision, employees may:

Work outside scheduled hours
Respond to emails after hours
Perform “quick tasks” that go unrecorded
Monitor Slack, Teams, or other communication platforms during off-hours
Log in briefly on weekends to address “urgent” issues
Update files, enter data, or complete administrative tasks informally
Work through meal periods without recording missed or interrupted breaks

Employers may be liable for unpaid time if they “knew or should have known” an employee was performing work — even if the employer had not requested the work, and even if the employee did not record the time worked. Addressing this risk in a remote workforce requires alignment among timekeeping systems, company policies, and supervisory oversight to effectively identify and mitigate off-the-clock work.

Employers should ensure they have implemented reliable, user-friendly timekeeping systems that are fully accessible to remote and hybrid employees and designed to capture all hours worked, including work performed outside scheduled shifts. From a risk mitigation perspective, it is critical to require accurate, contemporaneous recording of time and to maintain clear, consistently enforced policies prohibiting off-the-clock work — while also reinforcing that all hours worked will be paid, regardless of whether the work was “authorized.” Employers should further ensure that managers are trained to recognize and avoid practices that could be construed as discouraging time reporting or off-the-clock work.

Calculating Overtime Correctly

In a remote and hybrid environment, unrecorded off-the-clock work can lead to the underpayment — or complete non-payment — of overtime wages, particularly where total hours worked are not fully captured. These risks can be compounded by misclassification of employees as “exempt.” If an employee’s duties do not meet the applicable exemption criteria, they should be treated as non-exempt and are, therefore, eligible for overtime pay.

Limited day-to-day visibility into remote employees’ actual work further increases exposure, making it easier for both unrecorded time and classification errors to go unnoticed. Together, these issues can quickly escalate into costly class and collective actions.

Employers should conduct regular reviews of exempt and non-exempt classifications, including remote roles, to ensure they reflect employees’ actual duties. They should also ensure managers have sufficient visibility into employees’ day-to-day work to identify potential overtime risks. In addition, employers should confirm that all hours worked are captured and that overtime is calculated correctly, with clear expectations around work hours and controls to flag employees approaching overtime thresholds.

Multi-State Compliance Complications

Remote and hybrid workforces frequently span multiple jurisdictions, often without employers fully appreciating the compliance implications. When employees work from states or localities where the employer has limited presence or experience, they may become subject to different wage-and-hour requirements, including varying minimum wage rates, overtime rules, and record-keeping obligations.

In addition, some jurisdictions impose unique requirements, such as predictive scheduling laws or more stringent pay and documentation standards. These issues often arise when employees relocate — sometimes without formal approval — leaving employers unknowingly out of compliance with applicable local law.

Employers should maintain accurate, up-to-date records of employees’ work locations and implement processes to monitor and approve any location changes. Regular multi-state wage-and-hour audits are critical to identifying gaps in compliance, particularly where employees are working remotely across jurisdictions. Employers should also ensure that policies and pay practices are updated to reflect applicable state and local requirements and coordinate with counsel before approving out-of-state remote work arrangements to proactively manage risk.

Learn More

For a deeper discussion of these issues and practical guidance on mitigating risk, we will be hosting an upcoming webinar on best practices for managing a remote workforce on Wednesday, June 17, 2026. (Look out for an invite soon.) In the meantime, if you have questions about your organization’s compliance obligations, please contact your Foley Labor & Employment attorney.