October 14, 2016
Third Circuit Issues Guidance on Employer Requirements Under FLSA
Employers responsible for time spent on donning uniforms and protective gear.
On October 7, 2016 a panel of judges of the Third Circuit Court of Appeals, overturning the District Court, issued a major decision holding that Employers are responsible under the Fair Labor Standards Act (FLSA) to pay employees for time spent prior to and after a shift donning and doffing uniforms and protective gear and performing “shift relief,” even if they already pay employees for other, normally uncompensated time.
The Plaintiffs, a class of more than 160 employees of E.I. DuPont De Nemours and Co.; Adecco USA, Inc., spent between thirty and sixty minutes per day putting on and taking off uniforms and protective gear and sharing pertinent information with incoming employees when ending a shift (“shift relief”) in addition to working their regular twelve hour shift. The lawsuit was filed under the FLSA and Pennsylvania’s Wage Payment and Collection Law seeking overtime wages for these daily additional thirty – sixty minutes.
DuPont claimed that it could offset paying the employees for these additional duties with compensation paid to employees for meal breaks granted to employees during their shifts. A DuPont company policy grants employees one thirty-minute paid lunch break and two additional, non-consecutive thirty-minute breaks. Payment for break periods were included in employees’ regular paystubs as part of their total hours worked. DuPont’s argument was that since it paid employees for these breaks, which it is not required to do by the FLSA, that it could offset these payments against the unpaid work time, and that the paid non-work time always exceeded the unpaid work time. Based on this reasoning, the District Court granted DuPont’s Motion for Summary Judgment.
On appeal, the Court reversed the decision and remanded for further proceedings.
The Court first pointed out that the FLSA is to be construed liberally in favor of employees. Further, it noted that a bedrock principle of the FLSA is that employers must pay employees for all hours worked (which includes any time an employee is on duty, even if not engaged in “active productive labor”) and any time worked in excess of forty hours per week must be paid at the overtime rate of time and one half the normal rate.
The Court took note that the FLSA lists certain types of compensation that may be offset against overtime pay, none of which is the type of compensation involved in this case. As such, the compensation paid by DuPont to its employees for meal breaks was includable in employees’ regular pay, not “extra compensation” under the Act. Therefore, the Court held that allowing employers to credit compensation paid at employees’ regular rates for the first forty hours against overtime hours worked, as proposed by DuPont, would result in shortchanging employees and would violate the Act.
The main takeaway from this decision is that, other than specifically enumerated exceptions, even if an employer compensates its employees in excess of what it is required to pay its employees under the FLSA, such as for meal break periods, this does not vitiate its need to compensate them for all hours worked.