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3d Cir.: Employer Must Pay for All Breaks Shorter Than 20 Minutes Notwithstanding “Flex Time” Policy
Secretary United States Department of Labor v. American Future Systems, Inc.
This case was before the Third Circuit on appeal by the employer. The district court granted the DOL’s motion for summary judgment, holding that the employer’s policy of excluding time for breaks less than 20 minutes long violated the FLSA. The Third Circuit agreed and affirmed, holding that the Fair Labor Standards Act requires employers to compensate employees for breaks of 20 minutes or less during which they are free of any work related duties.
The court summarized the relevant facts as follows:
American Future Systems, d/b/a Progressive Business Publications, publishes and distributes business publications and sells them through its sales representatives. Edward Satell is the President, CEO, and owner of the company. Sales representatives are paid an hourly wage and receive bonuses based on the number of sales per hour while they are logged onto the computer at their workstation. They also receive extra compensation if they maintain a certain sales-per-hour level over a given two-week period.
Progressive previously had a policy that gave employees two fifteen-minute paid breaks per day. In 2009, Progressive changed its policy by eliminating paid breaks but allowing employees to log off of their computers at any time. However, employees are only paid for time they are logged on. Progressive refers to this as “flexible time” or “flex time” and explains that it “arises out of an employer’s policy that maximizes its employees’ ability to take breaks from work at any time, for any reason, and for any duration.”
Furthermore, under this policy, every two weeks, sales representatives estimate the total number of hours that they expect to work during the upcoming two-week pay period. They are subject to discipline, including termination, for failing to work the number of hours they commit to. Progressive also sends representatives home for the day if their sales are not high enough and sets fixed work schedules or daily requirements for representatives when that is deemed necessary.
Apart from those requirements, representatives can decide when they will work between the hours of 8:30 AM and 5:00 PM from Monday to Friday, so long as they do not work more than forty hours each week. As noted above, during the work day, they can log off of their computers at any time, for any reason, and for any length of time and may leave the office when they are logged off. Employees choose their start and end time and can take as many breaks as they please. However, Progressive only pays sales representatives for time they are logged off of their computers if they are logged off for less than ninety seconds. This includes time they are logged off to use the bathroom or get coffee. The policy also applies to any break an employee may decide to take after a particularly difficult sales call to get ready for the next call. On average, representatives are each paid for just over five hours per day at the federal minimum wage of $7.25 per hour.
On appeal, the defendant-employer raised three arguments: (1) that time spent logged off under its flexible break policy categorically does not constitute work; (2) that the District Court erred in finding that WHD’s interpretive regulation on breaks less than twenty minutes long, 29 C.F.R § 785.18, is entitled to substantial deference; and (3) that the District Court erred in adopting the bright-line rule embodied in 29 C.F.R. § 785.18 rather than using a fact-specific analysis. The Third Circuit rejected each of these arguments.
The court rejected the defendant’s that their defendant’s “flex time” policy was not a break policy within the meaning of the FLSA, reasoning that labeling its policy as “flex time” was simply a means to attempt to illegally circumvent the requirements of the FLSA.
The court next held that the DOL’s break time regulation, codified in 29 C.F.R. § 785.18 is entitled to Skidmore deference, the highest level of deference given to an administrative regulation. The court reasoned that the regulation was due Skidmore deference because: (1) the former FLSA specifically empowered the DOL to promulgate such regulations; (2) the DOL’s interpretation of the break time regulations has been consistent throughout the various opinion letters the DOL has issued to address this issue; and (3) the DOL’s interpretation is reasonable given the language and purpose of the FLSA.
Having determined that the regulation is entitled to deference, the court held that the regulation must be read to create a bright line rule and concluded that it does. The court explained that “the restrictions endemic in the limited duration of twenty minutes or less illustrate the wisdom of concluding that the Secretary intended a bright line rule under the applicable regulations.” As such, the court affirmed the decision below and held that defendant’s break policy which excluded time for breaks less than 20 minutes long violated the FLSA.
Click Secretary United States Department of Labor v. American Future Systems, Inc. to read the entire Opinion of the Court.
2nd Cir.: Reiterates Carrying 20 LB. Bag Does Not Transform Otherwise Non-Compensable Commute Time Into Compensable Time; Applyies “Predominate Benefit Test”
Clarke v. City of New York
Revisiting an issue it has previously ruled on, the 2nd Circuit held that an employee’s required carrying of 20 pounds of materials each day to and from work, during his or her daily commute does not transform otherwise non-compensable travel time into compensable work hours.
“This case falls squarely under the previously decided Singh v. City of New York, 524 F.3d 361 (2d Cir.2008). In Singh, a group of inspectors with the Fire Alarm Inspection Unit of the New York Fire Department brought a claim under the Fair Labor Standards Act (“FLSA”), as amended by the Portal-to-Portal Act, demanding compensation for their commuting time because they were required by their employer to transport and protect inspection documents. Id. The collective weight of their materials was between 15 and 20 pounds. Id. at 365.
We analyzed the claim in two parts, looking first to whether plaintiffs were entitled to compensation for the entire commute and, if not, whether they were entitled to compensation for the additional commuting time that resulted from their transport of these materials. Id. at 366-67. For the first part of the analysis, we applied a “predominant benefit test,” asking whether the employer’s restrictions hindered the employees’ ability to use their commuting time as they otherwise would have. Id. at 369. We determined that the inspectors’ commute was not materially altered by their document transport responsibilities, and thus they were not entitled to compensation for the entire commute. Id. at 370. We then looked to the second part of the test to determine if the additional commuting time that resulted from the transport of the documents was compensable. Id. While noting that the additional time was time spent “necessarily and primarily for the benefit of the City” and thus was compensable, we looked to a three-part test to determine if such compensable time qualified as de minimis. Id. The three factors were: “(1) the practical administrative difficulty of recording additional time; (2) the size of the claim in the aggregate; and (3) whether the claimants performed the work on a regular basis.” Id. at 371. Under this test, we determined that the additional commuting time was de minimis as a matter of law. Id. Thus, none of the plaintiffs’ commuting time was compensable under the FLSA. Id. at 372.
The facts of the case before us are materially indistinguishable from Singh. Plaintiffs in this case, like Singh, are responsible for the transport of a 20-pound bag of equipment. This 20-pound bag, however, does not burden the plaintiffs to such a degree as to make the City the predominant beneficiary of their commute. Their responsibility is limited to transporting the bag; there are no other active work-related duties required during the commute. Transporting a bag in a car trunk, or at plaintiffs’ feet on a train or bus, allows them to use their commuting time as they wish. To the extent that the bag adds time to their commute, we find, just as in Singh, that such time is de minimis and non-compensable.”
W.D.Wash.: Flight Attendants Not Entitled To Compensation For Training Time Which Was For Their Benefit
Ulrich v. Alaska Airlines, Inc.
The parties agreed to the applicability of and the Court applied, the six-factor test adopted by the Department of Labor in several Opinion letters, to determine whether trainees are employees under the FLSA.
The six factors which must be met in order for the trainees not to be employees are:
1) the training, even though it includes actual operation of the facilities of the employer, is similar to that which would be given in a vocational school;
2) the training is for the benefit of the trainees;
3) the trainees do not displace regular employees, but work under close observation;
4) the employer that provides the training derives no immediate advantage from the activities of the trainees; and on occasions his operations may actually be impeded;
5) the trainees are not necessarily entitled to a job at the completion of the training period; and
6) the employer and the trainees understand that the trainees are not entitled to wages for the time spent training.
The Court granted Alaska summary judgment, finding that Alaska’s training program meets all six requirements of the six-factor Department of Labor test. The Court therefore followed the American Airlines and TWA cases from the Fifth and Eighth Circuit Courts of Appeals in ruling that the flight attendant training program conducted by Alaska Airlines does not constitute compensable “work” under the FLSA. Additionally the Court held that the training time does it constitute work within California for which compensation is due under California labor law.