Beware Unpaid Rest Breaks for Non-Exempt Employees
January 18, 2016
A recent federal court decision in Pennsylvania affirmed the risks incurred by employers if they treat brief rest breaks as unpaid for non-exempt employees. In Perez v. American Future Systems, Inc. d/b/a Progressive Business Publications, the U.S. Department of Labor filed suit against the employer, a Pennsylvania publishing company, and its principal owner under the FLSA, claiming that the employer unlawfully required non-exempt sales employees working in its call center to log off and not be paid for any break time taken by the employees during the work day. These unpaid breaks included rest and bathroom breaks that lasted only a few minutes on occasion.
The employer’s policy permitted employees to take “personal breaks at any time for any reason.” The policy went on to state that such personal break time is unpaid. The employer also required the sales employees to log off its computer system (and be off the clock) unless they were on a sales call, recording the results of the call, or engaged in training, administrative, or other work-related activities. In other words, any time spent not working during the work day was unpaid, regardless of the length of the time spent not actively working.
In a decision issued in this case last month, Judge Restrepo of the U.S. District Court of the Eastern District granted summary judgment in favor of the DOL, finding both the employer and its principal owner liable for unpaid wages under the FLSA and an equal amount in liquidated damages, in an amount to be determined but estimated by the DOL to be at least $1.75 million. The Court found persuasive and applied the following DOL regulation (29 C.F.R. § 785.18) to the facts of the case:
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. Compensable time of rest periods may not be offset against other working time such as compensable waiting time or on-call time.
The Court also rejected the employer’s argument that another DOL regulation regarding off-duty time (29 C.F.R. § 785.16) applied, finding that breaks of 20 minutes or less during the work day did not constitute unpaid “off-duty” time for FLSA purposes.
This decision emphasizes that breaks for non-exempt employees of 20 minutes or less should be treated as compensable hours worked for minimum wage and overtime compensation purposes under the FLSA. Employers who try to save some costs on wages (or discourage employees from taking such breaks) by treating such breaks as unpaid face risk of FLSA liability in the event that this practice is challenged by an employee or the DOL.