Federal Court Clarifies Remote Work Overtime Rules for 2026

A federal appeals court has issued a decision that sharpens the rules on overtime for remote and hybrid workers. For small employers, it changes what you need to track — and how carefully.

What the court decided

The ruling confirms that time counts as compensable when an employer knows, or has reason to know, that a remote employee is working — even outside scheduled hours. "Out of sight" is not a defense.

Where employees answer messages after hours or start early from home, that time can push them past the 40-hour threshold and trigger overtime, regardless of where the work is performed.

What employers should do now

Put a clear written policy in place on logging hours for remote work, and make sure managers are not implicitly encouraging off-the-clock activity.

Keep accurate, contemporaneous time records. In a dispute, the employer generally bears the burden of showing hours worked — good documentation is your best protection.