Recent Third Circuit Decision Adopts Bright-Line Rule That Employees Must Be Paid For All Breaks 20 Minutes or Less

The Court of Appeals for the Third Circuit recently ruled that, under the Fair Labor Standards Act (FLSA), employers must pay employees for all breaks that are 20 minutes or less. Secretary United States Department of Labor v. American Future Systems, Inc., 2017 WL 4558663 (Oct. 13, 2017).

In American Future Systems, the employer changed one of its policies by eliminating paid breaks and, instead, implementing a so-called “flex time” policy. Under the new policy, the employer allowed employees to log off of their computers “at any time, for any reason, and for any duration,” and, when logged off, they were free to leave the office. However, the employer only paid employees for: (1) the time they were logged on their computer, and (2) log off periods that were less than 90 seconds in duration. Thus, under the new “flex time” policy, if an employee logged off of the computer for more than 90 seconds, the employer would not pay the employee for that period of time—even if it was to use the restroom or to get coffee.

The employer maintained that it did not have a “break policy” per se, and that such periods of time did not constitute “work,” because the employees were free to do anything they wanted and could even leave the job site when logged off of their computers. The court, however, rejected the employer’s argument.

The court explained that, “[a]lthough employers need not have any break policy, we refuse to hold that the FLSA allows employers to circumvent its remedial mandates by disguising a break policy as ‘flexible time.’” In finding that the employer’s “log off” times were clearly “breaks,” the court also made clear that all breaks of [20] twenty minutes or less are governed by 29 C.F.R. § 785.18 of the regulations, which expressly provides that “[r]est periods of short duration, running from 5 minutes to about 20 minutes … must be counted as hours worked.” The court reasoned that “breaks of twenty minutes or less are insufficient to allow for anything other than the kind of activity (or inactivity) that, by definition, primarily benefits the employer.” The court added that, while an employer must pay for all breaks of 20 minutes or less, employees who take more breaks than the employer permits should be disciplined, rather than denied pay.

The court’s adoption of this bright-line rule makes clear that, regardless of what an employer calls its policy, breaks of 20 minutes or less must be paid. Consequently, employers should review their wage and hour policies going forward to ensure that they comply with this rule, along with the myriad of other federal and state rules that apply to meal and rest breaks.