Paid Meal Breaks Cannot Offset Unpaid Overtime

October 17, 2016

A federal appeals court has held that employers must compensate all hours worked by non-exempt employees, even when employers pay employees for break time they could treat as non-compensable under the Fair Labor Standards Act ("FLSA"). Several employees filed an FLSA collective action seeking compensation for unpaid time spent donning and doffing uniforms and safety gear and performing other activities before and after their shifts.

Under the Employer’s written policy, employees working 12-hour shifts were paid for a 30-minute meal break and two other 30-minute breaks per shift. The Employer classified paid break time as hours worked for overtime purposes, even though the FLSA does not require it to do so. For the Employees at issue, paid break time always exceeded the unpaid pre-shift and post-shift donning and doffing time.

The Employer argued the Employees’ claims for unpaid overtime failed because it voluntarily treated break time as hours worked, such that the time qualified as an offset against the 30-60 minutes of daily unpaid pre-shift and post-shift time. The Court rejected the Employer’s offset argument. After focusing on the FLSA’s "broad remedial purpose," the Court noted that employers have some flexibility when considering whether to treat bona fide meal breaks as hours worked, but held the FLSA explicitly permits offsets against overtime pay only in three specific situations, none of which addressed paid meal breaks. The Court concluded that nothing in the FLSA authorized an employer to offset discretionary compensation the employer included in calculating employees’ regular rate of pay.

Even though the FLSA does not require the Employer to pay for meal and other breaks or to treat such time as hours worked, once it did so voluntarily, it could not use this time as an offset against other time spent working that it did not count for overtime purposes.