At work, not all time on the clock is spent in productive labor and is legally called nonproductive hours. The law still considers this to be work, however, and it can add up to a big expense for a business.
Definition of Nonproductive Hours
The Fair Labor Standards Act defines nonproductive work hours as time an employee spends waiting for an assignment, such as a receptionist doing a crossword while waiting for a phone call. Despite the fact that the employee does not engage in "work" during this period, the employer must compensate the person for this time because they are still required to work when needed.
Compensation and Nonproductive Hours
Not all nonproductive hours require compensation. Lunch breaks are not paid because the employee has no duties during this time. The same goes for on-call periods. Short breaks or rest periods are paid because they increase employee efficiency.
Payroll Implications of Nonproductive Hours
In some industries, nonproductive hours, including vacation, can make up a significant part of the payroll. Home remodelers, for example, average about 20 percent nonproductive hours. Some employers make workers sign agreements that the employee shall not receive compensation, or only be paid at a reduced rate, during nonproductive time.