New Jersey Employment Lawyer Blog
The Third Circuit Court of Appeals recently ruled that the Fair Labor Standards Act (“FLSA”) requires employers to pay employees for breaks during the workday that are no longer than 20 minutes long.
American Future Systems, which does business as Progressive Business Publications, publishes and sells business publications. Progressive pays its sales representatives by the hour, plus bonuses based on how much they sell, for the time they are logged onto their work computers. Most of Progressive’s employees are paid minimum wage.
In the past, Progressive allowed its employees to take two paid fifteen-minute breaks per day. But in 2009, the company implemented what it called a “flex time” policy. Under this policy, employees were permitted to log off of their computers whenever they wanted, for as long as they wanted, as long as they worked the agreed-upon total number of hours per week. But under this new policy, Progressive did not pay employees if they logged off of their computers for more than 90 seconds. In other words, it stopped paying them for breaks that lasted more than 90 seconds.
The Secretary of the United States Department of Labor filed a lawsuit against Progressive, claiming it violated the FLSA by failing to pay employees for their breaks. The lawsuit sought to recover those unpaid wages, as well as liquidated (double) damages.
The District Court ruled that Progressive’s policy had violated the FLSA. It relied on a regulation which states that: “Rest periods of short duration, running from 5 minutes to about 20 minutes, are common in industry. They promote the efficiency of the employee and are customarily paid for as working time. They must be counted as hours worked.” The District Court also awarded liquidated damages to the employees.
Progressive appealed, claiming its employees were not “working” after they logged off of their computers since they could do anything they wanted, including leaving the office. But, in Secretary United States Department of Labor v. American Future Systems, Inc., the Third Circuit disagreed. It explained that although the FLSA does not require employers to provide breaks to their employees, if an employer permits breaks then it must pay its hourly employees for any breaks that are 20 minutes or less.
The Court explained that although Progressive’s policy allows employees to take breaks that are longer than 20 minutes, that does not relieve the company of its obligation to pay employees for shorter breaks. Otherwise, for example, unless an employee could make it to the bathroom and back in less than 90 seconds, he or she would have to choose between going to the bathroom and getting paid. The Court ruled that this “result is absolutely contrary to the FLSA.”
The Third Circuit further indicated that the requirement to pay hourly employees for breaks of 20 minutes or less is a bright-line rule. In other words, the FLSA does not require employers to pay employees for breaks that are longer than 20 minutes. Of course, employers still can voluntarily agree to pay employees for longer breaks.
The Third Circuit also affirmed the District Court’s award of liquidated damages. It explained that these double damages are intended to compensate employees for any hardship they endured as a result of being denied the wages they earned. It further indicated that to “avoid mandatory liability for liquidated damages, an employer must show that it acted in good faith and that it had reasonable grounds for believing that it was not violating the Act.” It concluded that Progressive failed to meet this substantial burden.