In Secretary United States Dept. of Labor v. American Future Systems, Inc., the Third Circuit Court of Appeals ruled that an employer's policy of requiring employees to clock out for short (less than 20 minute) rest breaks violated the Fair Labor Standards Act (FLSA).
The employer's "flex time" policy permitted employees to set their own hours between 8:30 a.m. and 5:00 p.m. Employees were required to clock out for breaks, regardless of duration, because employees were only paid for the time they were logged on and working.
The Department of Labor (DOL) sued the employer for violating Section 6 of the FLSA, which requires employers to compensate employees for all breaks of 20 minutes or less.
The DOL asserted that the employees were routinely denied compensation for brief periods when employees used the bathroom, went for a coffee break, or simply took a few moments to relax. The Third Circuit agreed with the DOL.
The court observed that in such situations, the employer was free to discipline or terminate employees who take unscheduled or excessive breaks, but an employer cannot withhold legally-required compensation for rest breaks. The court further held that the employer's knowledge of the 20-minute rule for compensability of breaks rendered it liable for liquidated (double) damages under the FLSA on a class-wide basis.
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