Compensable Time: What Employers Should Know to Stay Compliant

Understanding compensable time is one of the most important but misunderstood parts of wage and hour compliance. Employers who miscalculate hours worked, overlook on-call time, or mishandle meal periods often find themselves facing costly audits, employee claims, and legal exposure.

Per the Fair Labor Standards Act (FLSA), you must pay employees for time they are “suffered or permitted” to work. While that standard sounds simple, it's not as easily put into practice.

Why Compensable Time Is Important

Wage and hour laws exist to ensure employees are paid fairly for their labor. The FLSA establishes minimum wage, overtime, and recordkeeping rules for most non-exempt employees.

When employers misclassify time spent working, even unintentionally, the consequences can include:

• Back pay awards
• Liquidated damages
• Civil penalties
• Attorney’s fees
• Department of Labor investigations
• Reputational harm

Understanding compensable time is not just a legal obligation, it's a business necessity.

The Foundation: What Counts as “Hours Worked”

Under the FLSA, employers must pay employees for all hours worked. This includes time when an employee is actively performing job duties and, in most cases, time when they are required to remain available.

In simple terms, time constitutes hours worked when:

• The employer knows or should know work is being performed
• The employee is under employer control
• The employee cannot freely use the time for personal purposes

Even unauthorized work may be compensable if management allows it to continue.

Defining Principal Activities of an Employee’s Workday

An employee’s workday begins when they start their principal activities and ends when such principal activity concludes.

What constitutes an employee's principal activities? These are the core job duties an employee is hired to perform; the activities that define the start and end of their paid time. For example, logging into or out of systems, preparing equipment, conducting safety checks, or opening a worksite are the launch of an employee's principal activities.

If a task is an integral and indispensable part of the job, it is usually compensable. Keep in mind, however, that an employee’s scheduled shift may not reflect all compensable hours. If they clock in at 7:52am for an 8:00am shift starting time and work an additional 12 minutes beyond their shift ending, they must be compensated for that extra time before and after their scheduled hours.

Preliminary and Postliminary Activities

The Portal to Portal Act signed in 1947 outlines which preliminary and postliminary activities should be payable. For example, time may be compensable when employees must:

• Inspect machinery
• Put on required protective gear
• Prepare work materials
• Secure employer property

Ordinary commuting, however, is not compensable work time. Each situation depends on particular circumstances and the nature of the employer’s business.

Is completing new hire paperwork considered compensable work time?

Yes, employees must be paid for time spent on any task that is necessary for work, including filling out new hire paperwork. You may require employees to complete Form I-9 prior to filling out the remaining forms or completing any work-required trainings or orientations to ensure they are legally able to work in the U.S.

If you have an online onboarding process that enables employees to get a jumpstart to their first day of work, be sure to have a clear-cut policy that explains it is the employee’s responsibility to report time spent on their own for completing work-required tasks. This might include completing forms, reading the employee handbook, or watching online training videos.

Time on the Employer’s Premises and Job Sites

Time spent on the employer's premises or at a job site is often compensable, especially when employees are restricted in movement. This applies whether the work occurs at a fixed location, field site, or temporary facility.

If employees must remain available, respond quickly, or follow employer rules, it likely counts as compensable time.

Waiting Time: Engaged to Wait vs. Waiting to Be Engaged

Waiting time is one of the most misunderstood wage and hour issues. Employees must be paid when they are “engaged to wait.”

Examples include:

• Maintenance workers waiting for repairs
• Drivers waiting for loads
• Receptionists waiting for calls

If employees are completely relieved of job duties (like leaving the premises for lunch) and have a specific time to return, they may be “waiting to be engaged” but the time can be unpaid.

On-Call Time and Employee Freedom

On-call time becomes compensable when restrictions prevent employees from using time freely. It is likely paid when employees must:

• Stay on the employer’s premises
• Remain within a short distance
• Respond immediately
• Avoid personal activities

Employees who only need to provide contact information may not have to be paid, depending on limitations. Again, each situation requires a case-by-case analysis.

Sleeping Time and Extended Shifts

Sleeping time can be compensable, especially for long-duty shifts. Generally speaking, employees on duty less than 24 hours are paid even if allowed to sleep.

For shifts of 24 hours or more, employers may exclude sleep time if:

• No more than eight hours are excluded
• Adequate sleeping facilities are provided
• Employees receive an uninterrupted night's sleep

Employers must truly provide adequate sleeping facilities to qualify. When interruptions prevent five hours of sleep, the entire period becomes paid.

Show-Up Time and Scheduling Practices

Federal law does not require show-up pay. If employees simply report to work and are then sent home without performing work (perhaps because of inclement weather that makes them unable to do the job), the time may be unpaid.

However:

• State laws may require payment.
• Collective bargaining agreements or company policies may require a set number of hours to be considered as time worked.

Employers should review local requirements carefully to know if employees must be compensated simply for showing up to work.

Remote Work and After-Hours Tasks

Remote work follows the same rules as onsite work. If employees answer emails, complete reports, or perform administrative tasks outside normal working hours, that time is compensable.

Employers must:

• Track remote hours
• Prohibit off-the-clock work
• Correct errors promptly

Technology makes unpaid work easy to perform and easy to overlook.

Bona Fide Meal Periods and Breaks

The FLSA does not require employers to provide meal breaks or rest periods. However, the U.S. Department of Labor (DOL) does say that if you choose to offer breaks, there are specific rules about when they do or don't have to be paid. In short:

• A short rest break for less than 20 minutes must be paid.
• Meal breaks can only be unpaid if the employee is completely relieved of job duties.

If employees answer phones, monitor systems, or assist customers while eating regular meals, the time must be paid. Although permission to leave the employer’s premises is not required, relief from all duties is essential.

Please check your local regulations, as many states do have rules and regulations for employee breaks, with specific rules to qualify.

Nursing Breaks

Most nursing employees are entitled to reasonable break time and private space. If employees perform work during nursing breaks, the time must be paid. Employers must also ensure the room where nursing mothers express milk is private and clean.

If your company has fewer than 50 employees, you may be exempt from this requirement if it creates an undue hardship (too expensive, company has limited financial resources, too difficult considering the nature and structure of the employer's business, etc.).

Training Programs, Meetings, and Lectures

Training programs and meetings are compensable unless all four conditions are met:

1. Attendance is outside an employee's normal working hours;
2. Attendance is voluntary;
3. Training is not job-related; and
4. No work is performed.

Failure to meet any condition makes the time compensable. Mandatory certifications, safety trainings, and operational trainings are usually paid, especially if their employment would be adversely affected if they did not attend.

Travel Time: When Is It Compensable?

When employees travel for work, it requires careful analysis of the type of travel involved.

Ordinary Commuting

Travel within the normal commuting area is generally unpaid, even in an employer's vehicle. If, however, an employee must transport other employees, pick up supplies, or perform other work while traveling to or from the worksite, this is compensable time.

Travel During the Workday

When travel is during regular work hours, it is compensable time (for example, traveling between jobsites). However when an employee is a passenger and is traveling outside of regular work hours, the time beyond normal work time is likely not considered hours worked.

Work While Traveling

When employees perform work while traveling, this is considered compensable time. Examples might include preparing reports, handling calls, mandatory reading, and completing similar duties. If an employee is given the option to use public transportation but chooses to drive their own vehicle instead, the employer may record as hours worked either the actual time spent driving or the amount of time that would have been counted as hours worked had the employee taken public transportation.

One-Day Assignments

When employees regularly work at one location and are given special one-day permission to travel to another city (returning home the same day), travel is generally paid.

Overnight Travel

Travel away from home is paid during normal working hours and corresponding hours on nonworking days. However, passenger time outside those hours may be unpaid.

Contracts, Customs, and Practice

In the event there's a written or unwritten contract between the employer and the employee, or there's a customarily paid practice where the work is performed, the time may be treated as compensable. However, only certain hours covered by the agreement must be paid.

For example, if an employer allots 15 minutes of compensable time for showering at the end of the workday but it takes the employee 25 minutes to shower, the work time would be limited to 15 minutes.

Turning Compliance Into a Competitive Advantage

From waiting time and sleeping time to meal breaks, travel, and training programs, every minute matters. Defining compensable time correctly not only avoids penalties and compliance risks, but also builds trust, protects productivity, and creates sustainable operations.

For questions about hours worked at your organization, please contact your certified HR expert. Not a current Stratus HR client? Book a free consultation and our team will contact you shortly.