WAGE AGAINST THE MACHINE: ARTIFICIAL INTELLIGENCE AND THE FAIR LABOR STANDARDS ACT.

• Author: Kelley, Bradford J.

INTRODUCTION 263 I. OVERVIEW OF AI AND WAGE AND HOUR USES 268 A. AI in a Nutshell 268 B. Uses of AI for HR Purposes 269 C. Customer-focused AI 274 D. Remote Work and Productivity Enhancement Tools 276 E. Wearable Technologies and Robotics 277 II. WAGE AND HOUR LAW: A LEGAL LANDSCAPE 278 A. Fair Labor Standards Act 278 B. Off-the-Clock Work 280 C. Continuous Workday 281 D. State Wage and Hour Laws 282 III. AI AND WAGE AND HOUR LAW RISKS 282 A. On-Call Time 283 B. Breaks 284 C. Timekeeping 286 D. Worker Coverage, Classification, and Exemptions 289 E. Joint Employer Status and AI 295 F. Self-Driving Cars and Mobile Workspaces 297 G. Payroll and Scheduling 298 H. Wearable Technologies and Robotics: Donning and Doffing Issues 300 I. Extraterritorial Concerns 301 IV. RECOMMENDATIONS FOR WAGE AND HOUR COMPLIANCE 302 A. Voluntary Compliance Programs 304 B. WHD Guidance 305 C. Best Practices for Employers 306 1. Policies Regarding Off-the-Clock Work, Remote Work, and Telecommuting 307 2. On-Call Time and Breaks Policies 308 3. Wage and Hour Audits 309 4. Vendor Liability Awareness 309 5. Awareness of AI Legislation and Developments 310 CONCLUSION 310 INTRODUCTION

Artificial intelligence (AI) has revolutionized the workplace including the wage and hour arena. (1) Some employers are increasingly deploying AI systems to make personnel decisions, determine pay, and monitor and evaluate performance. (2) Major companies are using AI-powered timekeeping systems or applications that can track when workers sign in and out of work, and the software allows employers to capture each second worked and to calculate their pay. (3) AI is also being used for automated scheduling and staffing purposes based on historical data, thereby improving employers' ability to monitor and control attendance and reduce overtime hours worked. (4) Companies like Amazon are using AI to determine the exact number of drivers needed in a specific area at any moment, based on factors including package volume, weight, and travel time. (5) AI-driven technologies are also increasingly being used for customer-facing functions such as predictive call routing that matches customers directly with agents based on the customer's specific characteristics, including their personality and history. (6)

Similarly, innovative AI-powered robotic systems provide healthcare professionals with the ability to perform complex procedures with greater accuracy compared to traditional methods. (7) Telesurgery is also rapidly progressing with the help of AI to enable surgeons to perform operations from remote locations, providing patients with greater access to critical surgical services and more specialized surgeons. (8) AI has also entered the automotive industry by enabling vehicles to travel without any human assistance. (9)

Despite its Orwellian overtones, the use of AI in the workplace has numerous benefits. AI can help companies monitor and control attendance and overtime while also providing employees with more control over their work, allowing them to be more engaged and productive. (10) AI-driven scheduling can benefit workers by allowing them to specify times they want to work and give them more flexibility, thereby increasing worker satisfaction and improving retention rates. (11) Automated scheduling and staffing has also been shown to reduce a company's costs by ensuring that worksites are not over (or under) staffed and whether overtime or less desirable shifts are disproportionately assigned by race or sex. (12) In addition, robotic systems, exoskeleton suits, and other wearable technologies have been shown to supplement mobility and muscle function, which not only tends to mitigate disabilities, but also reducing workplace injuries and enhancing general workplace safety. (13)

Despite these and other benefits of AI, employers also face a variety of wage and hour compliance risks. (14) Significantly, AI tools remain subject to existing laws, notably the Fair Labor Standards Act (FLSA) which sets the federal minimum wage and overtime requirements for employers when compensating covered employees for all hours worked each work week. (15) Under the FLSA, which was enacted in 1938 when AI technologies were mere science fiction, employees who are not exempt from the minimum wage or overtime requirements must generally be paid no less than the minimum wage for all hours worked in a work week and, for all hours worked in excess of forty, one-and-one-half their regular rate of pay. (16) AI and other technologies have made it easier to perform many jobs away from traditional employer workplaces, which has increased opportunities for employees to work at home and elsewhere. (17) The COVID-19 pandemic accelerated this transition. As a consequence, the line between work and non-work time is often less defined, with employees interspersing work and non-work tasks throughout the workday. This trend poses challenges to identify, record, and compensate time spent working. (18)

Depending on the ways in which they manage these issues, employers may face wage and hour liability stemming from a myriad of issues associated with AI, especially if the AI is poorly designed or misused. (19) Indeed, employers could face potential liability stemming from overtime calculation issues, irregular work schedules, and violations of work- and break-related restrictions, including prohibitions on non-exempt employees doing work outside of working hours. (20) For instance, employers may face FLSA exposure if they rely on AI-driven monitoring software to record the number of hours an employee works if the tool does not fully account for all time worked, especially in the absence of clear training, documentation requirements, and oversight. (21) AI-powered monitoring software can potentially fail to account for the time employees spend working away from their traditional workstation, including the time employees might use reviewing hard copy documents, reading printouts, taking handwritten notes, thinking, participating in a Zoom conference or a work call while on a walk, or any offscreen engagement with clients or patients. (22) Consequently, employees may end up doing extra work beyond the forty hours their employer expects them to work, which may entitle non-exempt employees to additional pay. (23)

Moreover, AI is increasingly impacting the coverage and classification of workers as technology has progressively enabled businesses to influence and possibly control the work of individuals performing services for them or under their brand. (24) For instance, critics of the "gig economy" point to Uber as an example of a company that uses algorithms to manage its drivers, while at the same time classifying them as independent contractors rather than employees. (25) The fact that AI allows for workers to be managed by algorithms--in some cases, even without using a platform--raises traditional wage and hour liability concerns in novel situations. (26) The use of AI and algorithmic technologies may also profoundly alter workers' primary duties, especially AI-powered programs such as ChatGPT and its newer iterations that produce responses to questions or prompts which have made headlines by writing essays on complex topics and even passing medical and law school exams. (27) The use of such AI tools in the workplace may adversely affect an employee's discretion, authority, and creativity, which certain FLSA exemptions require. (28) This technology, therefore, calls into question whether employees who were previously classified as exempt under the FLSA can now argue that they should no longer be so, which might entitle them to additional pay and expose employers to costly penalties and litigation. (29)

In a similar vein, AI is also increasingly influencing who is deemed the employer of any particular employee. (30) Because AI makes it far easier for businesses to exert control over the work of individuals who nominally are employed by other firms, the increased adoption of AI has made joint employment status more relevant. (31) For instance, Amazon requires its contract drivers to use specific delivery routes set by algorithms and follow detailed uniform personnel policies, including regarding required pay and benefits, hygiene, and social media use. (32) If businesses are considered joint employers, they each share the responsibility for minimum wage and overtime violations under the FLSA. (33) As technology allows businesses to exercise more control over work, especially with monitoring software, defining anyone's employer becomes more difficult and puts certain companies at a higher risk of being considered a joint employer and therefore jointly liable for wage and hour law violations. (34)

In addition, not paying workers for time spent putting on or taking off wearable technologies or robotics could expose employers to FLSA liability for unpaid wages. (35) As a general rule, the FLSA requires employers to compensate covered employees for time spent changing and washing clothes that they are required to wear for work. (36) Therefore, an important question is whether companies that require their employees to put on robotics or wearable technologies to perform their jobs must compensate them for the time spent changing into and out of the devices, in addition to any time spent maintaining the technologies. (37)

Self-driving cars and vehicles used as mobile offices will also trigger highly unique wage and hour compliance challenges. As a general wage and hour rule, the time employees spend during their normal commute (i.e., traveling from home to their regular workplace before the beginning of the workday and from the workplace back home at the end of the workday) is not considered work time and therefore is not compensable. (38) However, the rise of autonomous vehicles, which some describe as "offices on wheels," elucidates complicated issues if the technologies enable employees to perform...