“Flexible-Time” Policies:  Not a Way Around the Break-Time Compensation Policy of FLSA Rules the Third Circuit

October 19, 2017

Isaac Graff, Esq., Ty Hyderally, Esq., and Chantal Guerriero

Under the Fair Labor Standards Act (“FLSA”), employers who offer breaks of twenty minutes or less are required to consider such breaks as “hours worked” and must pay non-exempt employees for them. If an employer fails to pay such employees for these breaks, they could be liable for a violation of the FLSA. For one such employer, who implemented a “flexible time” policy wherein the employer did not pay its employees for any breaks exceeding 90 seconds, the United States Court of Appeals for the Third Circuit found that this “flexible time” policy ultimately disguised what was technically a “break time” policy, and thus violated the FLSA. Consequently, in a precedential decision issued on October 13, 2017, the employer was required to pay its employees all unpaid wages and an equivalent amount of statutory liquidated damages.

The case involved Progressive Business Publications (“Progressive”), a publishing and marketing company located in Pennsylvania.  Secretary of the United States Department of Labor v. American Future Systems, Progressive Business Publications, et. al. No. 16-2685 (3d Cir. 2017).  Prior to 2009, Progressive gave its employees two paid fifteen-minute breaks per day. Beginning in 2009, Progressive began using a “flexible time” system, which eliminated paid breaks and instead allowed employees to log off their computers at any time, for any reason, or for any length of time as frequently as they wanted.  However, if these breaks exceeded 90 seconds, employees would not be paid.

The Secretary of Labor brought suit, and argued that the policy violated section six of the Fair Labor Standards Act by “failing to compensate… sales representative employees for break[s] of twenty minutes or less…” 29 U.S.C. § 206.  As such, the Secretary sought to recover unpaid compensation owed to Progressive’s employees, an equal amount in liquidated damages, and a permanent injunction preventing Progressive’s implementation of its “flexible time” policy going forward.  The District Court agreed with the Secretary of Labor’s argument, and Progressive appealed the decision. Progressive first argued that since employees could do with their free-time whatever they wished to do, including leaving the office, this did not constitute work, and thus the FLSA did not apply. The Appellate Division disagreed, reasoning that the FLSA provides that ‘hours worked’ are not limited to the time an employee actually performs their job duties. Further, although the FLSA does not require employers to provide employees with short breaks of five to ten minutes, if employers choose to do so, then the employers must compensate their employees for such breaks. Progressive responded that they did not have a ‘break policy’ per se, but rather a ‘flexible time’ policy that allows employees to do with their time whatever they choose for twenty minutes at a time or less. The Court, however, disagreed with Progressive’s argument and ruled that the times their employees were not working under Progressive’s “flexible time” policy, did in fact, constitute breaks under the FLSA.

The Court explained that the “flexible time” policy effectively “force[d] employees to choose between such basic necessities as going to the bathroom or getting paid unless the employee c[ould] sprint from computer to bathroom, relieve him or herself while there, and then sprint back to his or her computer in less than 90 seconds,” which was “absolutely contrary to the FLSA.” Id.

This decision is a demonstration of the Third Circuit’s willingness to closely examine employer break policies in order to ensure that the policy behind the FLSA of balancing the health and well-being of workers without curtailing the earning power of employers is upheld.  As such, employer break policies are required to be reasonable and not infringe on an employer’s basic needs. This decision safeguards employees in New Jersey and the rest of the Third Circuit who are subject to unlawful break time policies, and provides support for them to seek relief by challenging such practices under the FLSA.

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