Paid breaks? The Third Circuit says yes, if they are 20 minutes or less.

Employers must pay employees for breaks that last 20 minutes or less, even when they are logged off their computers and not doing any work, according to a new decision by the Third Circuit Court of Appeals in Secretary, United States Department of Labor v. American Future Systems Inc., 873 F.3d 420 (3d Cir. 2017).

While some state laws require employers to give employees rest breaks, the major federal wage and hour law, the Fair Labor Standards Act (“FLSA”) does not. However, under federal regulations, if the employer does provide breaks between five and 20 minutes, it must pay employees for those breaks as “hours worked.” C.F.R. 785.18. The rationale is that those breaks primarily benefit the employer by increasing the efficiency of the employee.

In American Future, the company originally had a break policy that gave employees two 15-minute paid breaks per day. Then, it eliminated the breaks and switched to a “flex time” policy, which let employees decide when, why, and for how long to log off their computers. Under the “flex time” policy, employees were only paid for time logged off their computers if it was 90 second or less.

The company argued that it should not have to pay its employees for “flex time” breaks longer  than 90 seconds because employees were able to log off their computers whenever they wanted, to do whatever they wanted, and thus this time was not compensable “hours worked” as contemplated in the federal regulations. The Department of Labor argued that when “flex time” breaks lasted 20 minutes or less, employees didn’t really have time to do anything other than activities that primarily benefit the employer, and should therefore be compensated for this time.

The Court agreed with the Department of Labor and found that the company’s policy was just an unpaid break policy by another name:

“According to [the company], if an employer has a policy allowing employees to log off and leave their work stations at any time, for any reason, it does not have to compensate employees if they take a break. [The company] does not deny that it permits employees to log off; it just refuses to call those time periods "breaks" ... The policy that [the company] refers to as "flexible time" forces employees to choose between such basic necessities as going to the bathroom or getting paid unless the employee can sprint from computer to bathroom, relieve him or herself while there, and then sprint back to his or her computer in less than ninety seconds ... That result is absolutely contrary to the FLSA.” American Future, supra, at *8.

The company also argued that setting a bright-line rule at 20 minutes for compensable breaks would induce employees to abuse the rule by taking multiple19-minute-or-less breaks in a day. The Court disagreed with this argument, stating that, “[W]here the employee is taking multiple, unscheduled nineteen-minute breaks over and above his or her scheduled breaks for example, the employer's recourse is to discipline or terminate the employee—not to withhold compensation." American Future, supra, at *19-20, quoting Hawkins v. Alorica, Inc., 287 F.R.D. 431, 442 (S.D. Ind. 2012).

Thus, under the Third Circuit’s new decision in American Future, employers must compensate employees for breaks that are 20 minutes or less, and employees should avoid abusing the break policy or risk discipline or termination.

If you have been denied pay for short breaks, contact this office at 732-325-0318 to discuss your options.