AI and the Fair Labor Standards Act (FLSA)

AI systems are versatile, helping employers with tasks like tracking work hours, evaluating employee performance, scheduling, task assignment, and complex HR functions. Other systems focus on more specific tasks. These tools are used in remote, hybrid, and traditional workplaces.

They must be used responsibly because they can lead to compliance issues with federal labor laws.

The Field Assistance Bulletin (FAB) (https://www.dol.gov/sites/dolgov/files/WHD/fab/fab2024_1.pdf ) offers guidance on how to apply the Fair Labor Standards Act (FLSA) and other federal labor laws in workplaces increasingly adopting artificial intelligence (AI) and automated systems.

This article aims to simplify the bulletin and help you adapt to these new challenges.

1.?????? Hours Worked

a.?????? Tracking Work Time

Employers are required by the Fair Labor Standards Act (FLSA) to pay employees for all hours worked, regardless of their productivity or performance. This includes any time spent on the employer’s premises, on duty, or at a designated workplace.

Some AI and employee monitoring tools can track and analyze employee productivity in real time. These tools may monitor activities like keystrokes, mouse clicks, website visits, and even presence in front of a webcam to determine if an employee is "active" or "idle."

Relying solely on automated timekeeping and monitoring systems without human oversight can lead to issues with federal wage and hour laws. If an AI system incorrectly marks certain hours as non-compensable based on its assessment of worker activity or productivity, it may result in unpaid wages for hours worked.

Systems using metrics like keystrokes, eye movements, or internet browsing to gauge productivity can't accurately determine whether time counts as "hours worked" under the Fair Labor Standards Act (FLSA).

These metrics don't replace the need to evaluate if an employee was allowed or required to work during that time. Ensuring compliance requires a comprehensive approach that blends technology with human judgment.

b.?????? Monitoring Break Time

Regulations state that short workday breaks, typically 20 minutes or less, are usually paid. However, longer breaks, where employees are fully relieved from their duties and can use the time for themselves, are not paid. To qualify as such, employees must know beforehand that they can leave and won’t resume work until a later time.

Employers often rely on timekeeping systems to track work hours. Traditionally, these systems required employees to manually mark the start and end of their workdays and breaks. Nowadays, some systems use AI to predict and automatically fill in time entries based on previous patterns, scheduled shifts, and other data.

It’s crucial for employers to confirm that employees are entirely relieved of their duties during unpaid breaks. Systems that automatically deduct break times from work hours without ensuring the employee was relieved can violate the FLSA. For instance, if an employee typically takes a 30-minute unpaid meal break but skips it one day due to workload, automated deductions might lead to incorrect pay if not properly monitored.

c.?????? Wait Time

Waiting time can sometimes count as "hours worked" for which employers must pay employees. Whether waiting time is considered work depends on the situation. Here's a simplified guide:

If an employee is required by the employer to be available and ready to work, their waiting time is considered "hours worked." This means they should be paid for this time. This is called “engaged to wait.”

If the employee is free to use their waiting time for personal activities because they are completely off-duty, then this time is not counted as "hours worked."

For an employee to be completely off-duty, they must be informed in advance that they can leave their job site and told when they need to return.

AI and automated systems often manage tasks and schedules. For instance, warehouses use algorithms to provide real-time task instructions and optimize work routes.

These technologies can create issues around waiting time. If an employee is waiting for their next task, isn’t given enough time for personal use, isn’t fully relieved from duty, or must stay near their workstation without a set time to return, they’re considered "engaged to wait." According to the FLSA, this waiting time must be compensated as hours worked.

d.?????? Work Performed at Multiple Locations

Employers must track and account for all work performed, even if it occurs outside the scheduled shift or away from the company premises.

Some companies use location-based monitoring systems to track employees' work hours. These systems often use GPS from an employee's phone or wearable device to determine their location relative to a job site. The system then logs the "work hours" as employees enter and leave these sites.

Relying on location monitoring to track work hours can lead to issues, particularly if the system doesn't account for work done at different locations. For instance, if a construction worker is asked to pick up tools or supplies before reaching the worksite, their workday starts earlier than the time spent physically on-site. Likewise, if they complete tasks after leaving the site, such as unloading supplies, those hours should also be compensated.

If the system only logs time spent at the main site, it could miss travel between locations or other offsite work hours.

AI and automated systems for scheduling, timekeeping, and location tracking may not always capture all hours worked, especially when work occurs at multiple sites. Break times, periods of waiting, or tasks performed offsite can be overlooked.

2.???? Calculating Wages

When employers use AI or other technologies to determine wage rates, it's crucial they ensure all employees are compensated according to federal minimum wage and overtime laws. Even if wages fluctuate due to various factors, compliance is key.

Some AI systems calculate wages using automated algorithms based on a wide range of data. This data might include supply and demand, customer traffic, location, worker productivity, or the type of task performed. These systems can adjust pay rates throughout the day, which might result in varying regular rates from week to week.

Similarly, some systems assign tasks to workers based on certain criteria. When workers are paid per task or piece rate, and their assigned tasks change, their regular pay rate might vary each workweek.

Employers must oversee these systems to ensure they pay at least the minimum wage and correctly calculate regular and overtime pay. For employees with varying pay rates, employers should calculate the regular rate by totaling all earnings for the week (including hourly and piece rates) and dividing by the total hours worked. Overtime is then calculated by halving the regular rate and multiplying by the overtime hours worked. Alternatively, employers and employees can agree to calculate overtime at 1.5 times the hourly rate in effect when the overtime work occurs.

3.???? AI and the Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) ensures eligible employees of certain employers can take job-protected leave for specific family and medical reasons. This leave can be unpaid or taken alongside employer-provided paid leave. Once the leave concludes, employees are entitled to return to their previous or a similar position.

Employers sometimes use AI tools to manage leave requests and track time off. While these technologies can streamline processes, they must be used cautiously. Improper AI use can lead to compliance issues, such as: incorrectly calculating hours worked, which might misjudge FMLA eligibility; testing eligibility more frequently than allowed, potentially denying rightful leave; and miscounting available leave days, leading to unjust denials.

AI systems can pose risks if they misinterpret FMLA requirements. For example, if an automated system demands more medical information than permitted, it would breach FMLA rules. Similarly, automated penalties for missed certification deadlines could be inappropriate if the system doesn’t consider allowable exceptions for extra time.

4.???? AI and Nursing Employee Protections

Most nursing employees have the right to reasonable break times and a private space to express breast milk at work. Generally, employees are not required to be paid for these breaks unless specified by federal, state, or local laws.

When it comes to AI and other technologies that manage work hours, schedule tasks, or monitor productivity, employers must ensure these tools do not restrict the length, frequency, or timing of pump breaks.

5.???? AI and the Employee Polygraph Protection Act (EPPA)

The Employee Polygraph Protection Act of 1988 (EPPA) generally prohibits private employers from using lie detector tests on employees or job applicants. According to the EPPA, a "lie detector" includes tools like polygraphs, voice stress analyzers, and other similar devices used to assess honesty.

Some AI technologies can analyze eye movements, voice patterns, and micro-expressions to detect deception. However, using any such AI or similar technology as a lie detector is prohibited under the EPPA, except in specific circumstances outlined by the law.

Employers using AI or similar tools to assess truthfulness must adhere to EPPA's restrictions on lie detector tests. By doing so, businesses can ensure compliance and trustworthiness in their hiring and employment practices.

6.???? AI and Protection Against Retaliation

Employers incorporating AI in their processes should be careful not to use it in ways that retaliate against employees, violating federal labor standards.

Retaliation involving AI, where employers use technology to penalize employees for engaging in protected activities, is unlawful. For instance, using AI as a cover to discipline an employee who has filed a complaint or using AI to monitor workers suspected of participating in protected activities is considered illegal retaliation. Employers have also used systems to predict unionization likelihood, and using such systems to discourage employees from exercising their rights is prohibited.

Employers using AI for tasks like scheduling and productivity should ensure it's not used to retaliate against employees for participating in protected activities. Any AI-driven decisions impacting an employee's work conditions based on their involvement in protected activities could be seen as unlawful retaliation.

7.???? Conclusion

When used responsibly, AI can enhance compliance with the law. However, without proper human oversight, these technologies might pose risks to workers, potentially leading to labor standards violations. Furthermore, AI in the workplace could lead to widespread systemic issues. Employers remain accountable for any legal breaches resulting from the use of AI or automated systems. It is crucial for employers to ensure the responsible use of AI to maintain compliance with the laws enforced by the WHD.