Earlier this year, a federal judge ruled that a Pennsylvania company with an office in Woodbury Heights, New Jersey owed employees almost $2 million in back wages for forcing its employees to clock out for even very short breaks - including trips to the bathroom.
Flex Time or FLSA Violation?
According to the Department of Labor ("DOL"), who filed the lawsuit, American Future Systems, which was doing business as Progressive Business Publications in Pennsylvania, Ohio, and New Jersey, forced its telemarking employees to clock out when they were not making sales calls. In fact, employees were not even allowed to get water or go to the bathroom without clocking out. The times during which employees were clocked out were then deducted from their pay.
The DOL discovered what the company was doing and filed suit. Even during the period during which the lawsuit was ongoing, however, the company refused to stop their clock out policy, arguing that what they were doing was actually really fair because they were giving employees the flexibility to manage their own schedule and take as many breaks as needed during the day.
The judge, relying upon regulations that make clear that short breaks (typically those under 20 minutes) are compensable, ruled that the company's clock in/clock out policy was a violation of the federal Fair Labor Standards Act (FLSA). The company is now on the hook for over $1.75 million in back wages and liquidated damages owed to more than 6,000 employees.
Employees Must Be Paid for Short Breaks
The FLSA does not require employers to give their employees short breaks for things like smoking, grabbing a drink, or going to the bathroom; however, employers who permit their employees to take short breaks (anything in the 1-to-20 minute range), must pay for those breaks. Put more succinctly (and more legally) short breaks are considered compensable time - meaning that employees must be paid for that time. All compensable time must be included in the sum of hours for the work week, counted for purposes of determining whether an employee has earned overtime, and used to calculate how much overtime was earned.
So, for example, if a non-exempt employee worked 42 hours over 5 days during one week, but spent an average of 30 minutes on multiple small breaks throughout each day, the employer would still need to pay the employee for 42 hours of work that week. That means that unless the employee was exempt from the FLSA's or New Jersey Wage and Hour Law's (NJWHL) overtime rules, the employer would be legally required to pay that employee 40 hours at the regular rate of pay and 2 hours of overtime at one and one-half times the regular rate of pay. Adding up all the breaks (an average of 30 minutes per day times 5 days = 2.5 hours). Subtracting those 2.5 hours from the total hours worked in order causing the employee to appear as if s/he worked less than 40 hours during the week is not permitted.