“Smart phones” (Blackberrys, iPhones, and Droids, to name a few) are cell phones on steroids. Most smart phones have email, texting, video display, internet access and all of those cool apps. Employers are already enjoying the benefits of employees' use of smart phones, but often without realizing that there are also legal and business risks involved too. Now is the time for employers to make strategic decisions about smart phones and establish policies, procedures and other practical steps in order to keep up with the new technologies that employees are using in connection with work.

Employers reap enormous benefits in terms of improved customer relations, expedited work flow and enhanced bottom lines when employees use personal and company-owned smart phones to call, text, e-mail and tweet with clients, co-workers, suppliers and the public. These devices allow employees to access the internet and company computer systems 24/7 from virtually anywhere in the world. Moreover, smart phones are just the tip of the iceberg; other emerging technologies such as iPads, cloud computing (the use of servers and software owned by third-party vendors), Wikis (interlinked collaborative websites) will help employees work more efficiently, but also further complicate things for employers.

Not surprisingly, smart phones and other new technologies do not come without a price–they present employers with some major compliance risks. These risks can arise whether the smart phones are company-owned or personally purchased by employees and include the legal liabilities that can arise when:

  • Managers improperly try to determine whether employees are using smart phones for work purposes
  • Employers fail to pay employees for time spent on smart phones
  • Smart phone usage compromises corporate data security
  • Employees use smart phones to post messages on social media sites that disparage company products, harass co-workers and/or injure corporate brands.

The first step for employers is to determine how and to what extent employees use smart phones for work. As a general rule, whenever hourly-paid non-exempt employees work on smart phones during off-duty hours, they must be compensated unless the time spent working on the phones is de minimis. Employers can avoid some of these wage-hour issues involving non-exempt employees by either (i) prohibiting them from using smart phones for work while off-duty or (ii) utilizing the “fluctuating workweek” method, which requires, among other things, a written agreement paying the non-exempt employee a salary for all straight time hours worked in a week and providing overtime pay at a fluctuating rate for more than 40 hours of work in a week. However, the time that a non-exempt employee merely has to carry a smart phone, but does not use it for work is usually not compensable as long as he or she is free to engage in personal activities.