In Secretary, U.S. Dep’t of Labor v. American Future Systems, Inc., the United States Department of Labor (DOL) brought suit against the employer for violating the regulation that states that “[r]est periods of short duration, running from 5 minutes to 20 minutes . . . are customarily paid for as working time” and “must be counted as hours worked.” In this case, American Future Systems had a flexible time policy that permitted its sales representatives to log off of their computers at any time, for any duration and for any reason. The policy was intended to maximize employees’ freedom to take breaks as needed, but employees ended up constantly facing the dilemma of foregoing pay when taking brief breaks to, for example, use the rest room, fetch a cup of coffee or mentally recover from what may have been a demanding sales call.
On appeal from the lower court’s ruling in favor of the DOL, the employer argued the time spent by sales employees logged off of their computers under the company’s flexible time policy does not constitute work and that the district court erred in adopting the bright-line short break rule stated above. Rejecting the employer’s arguments, the Third Circuit reaffirmed the longstanding FLSA regulation that, while the Act does not require an employer to provide employees with breaks (although several state laws do), if the employer chooses to do so, breaks lasting up to twenty minutes are considered compensable hours worked. The Court also rejected the employer’s argument that a fact-specific analysis should be applied to determine whether a short break is compensable under the FLSA and the DOL’s interpretive regulation. On the contrary, the Court of Appeals confirmed that a bright-line test has already been established by the regulations and to hold otherwise would establish a “burdensome and unworkable” administrative regimen.
Coverage: Employers with employees in the Third Circuit. The Third Circuit includes the states of Delaware, New Jersey, and Pennsylvania.
Effective: The decision was issued on October 13, 2017.
Action Required: You should ensure that breaks that are 20 minutes or less in duration are paid as working time.
As always, please contact your HR Business Partner if you have any questions.
* Produced in cooperation with Jackson Lewis P.C.